31 December 2013

Nigeria: Macro Economic Instability Blamed for Nigeria's Poor Industrial Growth in 2013

As the United Nations Industrial Development Organisation (UNIDO) released statistics indicating that Nigeria and other African nations only managed a 0.1 percent industrial growth in the third quarter of 2013, stakeholders in the Organised Private Sector have blamed macro economic instability for the poor result in Nigeria.

Vice President of the Nigerian Association of Chambers of Commerce and Industry Mines and Agriculture (NACCIMA) Mr. Dele Oye noted that the nation's economy for most part of 2013 was characterised by considerable vulnerability to external shocks, which in turn dampened its prospects for sustained growth.

The NACCIMA boss explained that macroeconomic stability is essential to buffer the economy against currency and interest fluctuations in the global market but stressed that with all indices of stability going awry in the Nigerian economy mostly in the latter half of the year, the industrial sector came against too much odds that prevented significant growth from taking place.

Director General of the Lagos Chambers of Commerce and Industry (LCCI), Mr Muda Yusuf who also commented stressed that all the variables of economic stability showed severe signs of volatility during the year, with inflation being relatively high and unstable; interest rates soaring and currency exchange rate largely unstable.

UNIDO reported that World manufacturing output increased modestly at 2.4 per cent during the third quarter of 2013 amid a continued recovery in industrialised countries, but manufacturing growth rates in developing and emerging industrial economies have slowed.

Manufacturing output in the United States of America grew by 2.3 per cent and in Japan by 2.0 per cent in the third quarter. However, the recovery in eurozone countries remained fragile and could not maintain the recently observed growth trend. Manufacturing output again dropped in France and Italy.

Outside the eurozone, manufacturing output in Norway grew by 3.9 per cent and in Switzerland by 9.4. However, in the Russian Federation it plunged by 7.0 per cent.

Among developing and emerging industrial economies, China maintained an exceptionally high manufacturing growth rate of 9.3 per cent. The combined growth rate of other developing and emerging economies was just 2.0 per cent in the third quarter.

The slow pace of manufacturing growth has become a common phenomenon for developing and emerging industrial economies. The major obstacles are related to high input prices, including energy costs, low demand and a reduced outflow of capital from industrialized countries. In the third quarter, the manufacturing output of Brazil grew by just 0.4 per cent, India by 1.2 per cent and Mexico by 1.0 per cent.

From the analysis of output growth figures by sector, some early signs of a return of manufacturing activity in industrialized countries were observed. For the first time in many years, production of wearing apparel and consumer electronics showed notable growth in industrialised countries.

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