NECA calls for policy measures to address inflation

The Nigeria Employers’​ Consultative Association (NECA) has asked for effective conventional policy measures that can address the demand and supply shocks caused by the Covid-19 pandemic.

NECA in a statement said the shocks are due to the lockdown and closure of businesses which has affected the economy, and has led to the increase in inflation rate to 12.26% in March, 2020 amid Covid-19 pandemic.

A report released by the National Bureau of Statistics (NBS) on Tuesday showed that the March, 2020 Consumer Price Index rose for the eight consecutive month and the highest inflation rate the country has recorded in 23 months.

The rise, according to NECA shows that recession looms in the economy amidst the rapid spread of COVID-19 pandemic.

“Early containment of the spread of the virus and resumption of economic activities, coupled with various fiscal and monetary interventions by the authorities; that is, conventional policy measures currently being taken such as reducing interest rates and costs of borrowing, tax cuts and tax holidays are quite remarkable.

“However, these conventional policy measures are quite potent when there are demand shocks.”

On the economy, NECA said the measures will address the demand and supply shocks and stimulate the economy ahead of the potential recession.

“There are limitations to the successes that can be recorded when demand shocks are combined with supply shocks. It is already apparent from the emergence of the current crisis that there are implications on the economy from both the demand and supply sides.

“Some of the demand factors include social distancing with consumers staying at home, limitations in spending and declining consumptions. On the supply side, factories are shutting down or cutting down production and output, while in other instances, staff work from home to limit physical contact.”

 

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