Economic growth drops to 7.69% in 2011 – CBN

*Unemployment rises to 23%
*Retains MPR at 12%

The Central Bank of Nigeria, CBN, said the growth rate of the nation’s economy fell to 7.69 per cent while unemployment rose to 23.9 per cent in 2011.



The apex bank, however, maintained its benchmark interest rate, the Monetary Policy Rate at 12 per cent and assured that it would pursue stable exchange rate in 2012 as the partial removal of fuel subsidy would enhance increase in the nation’s external reserves,

Governor, CBN, Mallam Sanusi Lamido Sanusi, said this, yesterday, while reading a communique of the Monetary Policy Committee, MPC, meeting held in Abuja.

He said: “Provisional data from the National Bureau of Statistics, NBS, indicated that real Gross Domestic Product, GDP, grew by 8.68 per cent in the fourth quarter of 2011 up from 6.64, 7.72, and 7.40 per cent in the 1st, 2nd and 3rd quarters, respectively.

“The overall GDP growth rate in 2011 was estimated by the NBS at 7.69 per cent, marginally lower than the 7.87 per cent recorded in 2010. This projection is based on the estimated Quarter III and Quarter IV growth rate of 7.40 per cent and 8.68 per cent respectively.

“The 2012 budget proposal assumed a growth rate of 7.2 per cent. This is in line with the latest World Bank forecast of 7.1 per cent growth for Nigeria in 2012. The committee noted with satisfaction, the good performance of non-oil activities including agricultural and services sectors as well as the recovery in crude oil output in 2011, particularly in the fourth quarter.


“In the committee’s view, the opportunity to build on the robust non-oil growth with further investments in infrastructure and manufacturing and processing activities should be utilised in order to mitigate any negative impacts from the likely external shocks during the year.
Impact of subsidy removal

On the impact of the partial removal of fuel subsidy on the external reserves, Sanusi said the nation’s foreign reserve had been under tremendous pressure since 2010 owing to the import dependency of the nation’s economy.

His words: “Foreign exchange reserves amounted to US$ 32.64 billion as at end December 2011, more or less relative to the US$32.34 billion as at end December 2010, despite the higher oil price in 2011.

“Notwithstanding the high prices of Nigeria’s reference crude oil (Bonny Light) which averaged US$106.32 per barrel for the year, the limited accretion to external reserves was due to the high demand for foreign exchange in the market.

“With the partial removal of the fuel subsidy, we will focus on building up the nation’s foreign reserves since there will be less pressure in terms of demand for the foreign exchange.”

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