The firm’s projection came on the heels of the International Monetary Fund (IMF) prediction of a slower growth for the Nigerian economy in 2002.

The International Monetary Fund (IMF), at the recently commenced annual World Bank/IMF Meetings in Washington DC on Tuesday, sliced its earlier 2022 growth forecast for Nigeria to 3.2 percent from the 3.4 percent it projected in June.

This downgrade is due to the prevailing impacts from global supply chain disruptions, which have driven up inflation substantially and raised fears of global recession as central banks tighten monetary policy to tame soaring food and energy prices.

If the FDC’s prediction proves right, it will be the eight consecutive monthly increase and the highest rate of inflation in 16 years.

In a report released over the weekend, the FDC stated that inflation is expected to sustain its upward trend in September though at a slower pace

The advisory firm attributed the continuation of the uptrend in inflation to “dwindling forex inflows” and unattractive interest rates.

Furthermore, the firm, which noted that political campaign and election spending will lead to a spike in liquidity, pointed out that: “An increase in aggregate demand without a corresponding increase in aggregate supply will stoke inflation.”

In an earlier report, FDC had also cited the likely passage of the current wage review of lecturers in public universities as another development that could worsen inflation.

The firm said: “The risk to this trend remains with the likely passage of the current wage review of public lecturers. And the money supply will increase coupled with the release of funds for election campaigns

The increased liquidity will cause a demand pull effect which could compound inflationary pressure.

Although, harvest season might increase output, which could have a further positive effect on the food basket.

This has increased the worry among watchers of the Nigerian economy as the recent IMF projection has raised concerns over the challenges faced by businesses and households amidst ongoing Russia-Ukraine conflict.

In its latest World Economic Outlook for October 2022 titled, “Countering the Cost-of-Living Crisis”, the IMF projected a growth contraction for sub-Saharan Africa from 3.8 per cent to 3.6 per cent.

It cited the strength of the dollar as a major challenge tightening financial conditions, and increasing the cost of imported goods.

Nigeria is faced with the continuous fall of the Naira against the US dollar, trading at about N440 and N730 at the official and parallel market respectively.

IMF said the dollar is currently at its strongest since the early 2000s.

“Although the appreciation is most pronounced against currencies of advanced economies. So far, the rise appears mostly driven by fundamental forces such as tightening US monetary policy and the energy crisis,” it said.

“The appropriate response in most emerging and developing countries is to calibrate monetary policy to maintain price stability, while letting exchange rates adjust, conserving valuable foreign exchange reserves for when financial conditions really worsen.

“As the global economy is headed for stormy waters, now is the time for emerging market policymakers to batten down the hatches.”

The Fund also projected the global economy’s growth to slow from 6.0 per cent in 2021 to 3.2 per cent in 2022 and 2.7 percent in 2023.

“The global economy is experiencing a number of turbulent challenges. Inflation higher than seen in several decades, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook,” it said.

“Normalization of monetary and fiscal policies that delivered unprecedented support during the pandemic is cooling demand as policymakers aim to lower inflation back to target. But a growing share of economies are in a growth slowdown or outright contraction.

“The global economy’s future health rests critically on the successful calibration of monetary policy, the course of the war in Ukraine, and the possibility of further pandemic-related supply-side disruptions, for example, in China.”