Business Operators Hold Pessimistic Views on the Macroeconomy – CBN Report

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SWITZERLAND, JUNE 27 – A report issued by the Central Bank of Nigeria, CBN on Thursday has revealed that business operators in different sectors lack confidence in the economy.

The CBN’s Statistics Department disclosed this in its ‘June 2020 business expectations survey’, which was conducted for businesses nationwide.

According to the report, “Respondent firms expressed pessimism on the macroeconomy. Their outlook on the volume of total order, financial conditions (working capital), access to credit and average capacity utilisation all remained negative, but optimistic on the volume of business activities.

“Firms identified insufficient power supply, competition, high-interest rate, financial problems, unfavourable economic climate, unclear economic laws, insufficient demand, uncertain political climate, access to credit and lack of equipment as major factors constraining business activity.”

Respondent firms also said that they expect the naira to depreciate in the current month but appreciate from July to December.

“Inflation level is expected to rise in the next six and 12 months, while the borrowing rate is expected to rise in the current month, next month, next two months and next six months,” it added.

Sampling 1,050 businesses nationwide, a response rate of 96 percent was achieved, which covered the agric/services, manufacturing, wholesale/retail trade, and construction sectors.

The respondent firms were made up of small, medium and large corporations, covering both import-oriented and export-oriented businesses.

Overall confidence index which stood at -24.3 index points indicated respondents’ pessimism on the overall macroeconomy in June.

Respondents were, however optimistic in their overall business outlook for the months of July, August and December with confidence indexes of 31.8, 47.4 and 67.8 respectively.

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