Economic trends we expect in Nigeria in 2021

We are officially looking ahead. 2021 here we come. We expect the following trends in 2021:

The Nigerian Economy

1. Inflation rates will remain high unless the CBN reforms the monetary policy to focus on price stability. The upcoming harvest and recovery in domestic production may ease the inflation surge and the land borders which also affected food traders may be lifted next year.
2. The CBN was not able to prevent an economic recession but we expect strategic management of interest rates in 2021.
3. Oil prices are projected to stay low due to the uncertainty over the pandemic effects, which mean FG revenue deficits will remain the order of the day if a major alternative source of revenue is not tapped into.The recession is expected to wear off in 2021 if and only if the impact of the lockdown in 2020 fades, a fade would mean the resumption of economic activities therefore global oil prices may improve so, 2021 may be exciting if this happens.

Policy Trends

The Federal Government secured two major loans this year: $3.4bn emergency support loan from the IMF recently a $1.5 billion package to help boost a post Covid-19 recovery.

To satisfy the requirements of both loans,

•Another devaluation of the Naira may take place in 2021, so that the official exchange rates and NAFEX rates can be unified, if this takes place, the CBN will only step in if large fluctuations of the exchange rates occur.

•Fuel prices are likely to be determined automatically.The current VAT (7.5%) is likely to be increased by an additional 2.5% to increase the revenue generated by the Federal Government of Nigeria, this will put a strain on low income earners and individual disposable income.

Global Trends

A lot of companies operating in the big tech space such as Amazon, Apple, Google and Facebook are likely to be hit with fines if they do not comply with data security laws. Facebook for example might split from WhatsApp and Instagram if they fail to comply, the effect of these huge fines on these companies may reflect on their stock prices.

Investing in health, particularly in the Covid-19 vaccines may become an investing trend. The vaccine needs to be stored at -70 degrees Celsius which would mean a possible surge in demand for cold storing systems. Pharmaceutical, refrigerator manufacturing companies and even delivery companies may see their earnings climb up because many countries may subscribe to receiving the vaccines.Overall, the World Bank projects that the Nigerian economy is forecasted to grow at 0.3%, if you are drained try remain optimistic and keep planning. Finally, remember to rationalize your spending.