The Central Bank of Nigeria (CBN) Business Expectations Survey for October 2020 has shown that firms still anticipate inflation would rise further and the naira would further depreciate in November.
The October 2020 CBN Business Expectations Survey was conducted online from October 12-16, 2020, with a sample size of 1050 businesses nationwide.
A response rate of 89.4 per cent was achieved, and the sample 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.
The latest inflation rate released by the Nigerian Bureau of Statistics (NBS) stands at 13.71% while the naira currently exchanges for N458/$1.
“Respondent firms expect the naira to depreciate in the current month but to appreciate in the next month, next two months and the next six months.
“Inflation level is expected to rise in the next six and 12 months, while borrowing rate is expected to rise in the current month, next month, next two months and the next six months,” the report said.
Respondent firms also “identified insufficient power supply, financial problems, high-interest rate, competition, unfavourable economic climate, unclear economic laws, unfavourable political climate, insufficient demand, access to credit, and lack of equipment as major factors constraining business activity in October 2020.”
The report indicated that at -1.5 index points, the overall confidence index (CI) on the macro economy was pessimistic in October 2020.
However, respondents are optimistic in their outlook for November with a confidence index of 37.9. They also expressed optimism in the overall business outlook for December 2020 and April 2021 as shown in greater confidence of the economy at 46.1 and 59.7 index points, respectively.
The major drivers of optimism for next month were agric/services (20.0 points) and manufacturing sectors (13.4 points).
Further analysis revealed that businesses that are neither import nor export-oriented (-2.2 points) and import-oriented (-0.3 points), drove the negative business outlook for the month under review.