FG’s 7% growth report questioned




The report by the National Bureau for Statistics (NBS) that the economy grew by 7.2 percent in the first quarter of 2010 is raising eyebrows among experts who say it is illogical for the economy to have grown by such magnitude when key components that drive the economy are looking downward. Specifically, they identify negative growth in the automobile industry where imports declined by 55 percent, house prices which have remained depressed, and little or no foreign investors trickling in, as factors that make the report unrealistic.


On the contrary, NBS’ stance is that the increase in crude oil production as a result of the success of Federal Government’s amnesty programme added fresh impetus, and thus, growth, to the real sector. But Bismarck Rewane, renowned economist and chief executive officer of Financial Derivatives Company (FDC), insists that housing, automobile and retail sales, manufacturing output, among others, are examples of proxies used all over the world to measure the level of economic activities.


“The question many have asked is how a country can record a real growth rate of 7.2 percent in the first quarter with house prices remaining depressed with analysts reckoning that it is yet to bottom out; new automobile imports declining by 55 percent in the same period, and a stuttering manufacturing output”, he said in his FDC Economic Monthly for July.


In his view, the plethora of national maladies makes the idea of a 7.2 percent growth startling. Rewane said institutional and infrastructural deficiencies, a struggling financial sector that has drained credit from the private sector, little or no foreign capital investments as political and policy environments remain highly volatile, all constitute major growth barriers.This volatile environment had resulted in delays to the final investment decisions on key projects by multi-nationals like Shell Nigeria, among others.


Okechukwu Unegbu, former president of the Chartered Institute of Bankers of Nigeria (CIBN), said he did not perceive any form of growth in the economy during the first quarter. According to him, the rate of unemployment went up, as many people were laid off in various sectors. Unegbu noted that most industries were either shut or declined in productivity, while the capital market is yet to recover from the slump.


Thomson Okoli, a manufacturer of polythene products, said he is almost closing shop because of the near collapse in public power supply. According to him, they (manufacturers) are billed specially by the Power Holding Company of Nigeria (PHCN) even after providing their own transformers and procuring special cables for connecting their factories to the national grid.


Okoli, who operates in Lagos, said the agonizing part is that a particular amount is paid to PHCN whether commensurate power is supplied or not. He said many manufacturers like him, who depend on the availability of power are beginning to look elsewhere for their livelihood. He wondered what could be growing the economy.


Rewane likened the kind of economic data reeled out to a situation where nothing can be more counterproductive than a doctor’s medication that is premised on a distorted diagnosis.”The authenticity and reliability of government released data has been the subject of debate for a long time. For instance, there is a lot of controversy about growth, inflation and other macroeconomic figures”, he said.





Comments are closed.