PwC Nigeria has projected that Nigerians would face more economic hardship, noting that wage adjustments may not be made simultaneously and proportionately.
In its ‘Nigeria Economic Outlook’ report, the firm also forecast an increase in the higher cost of doing business and lower revenue for Nigerian businesses due to the impact of recent economic reforms by the government.
According to the firm, the continued inflationary growth and rise in the cost of living may slow real economic growth in the medium term.
The report read in part, “Consumer spending may be adversely impacted by the elevated inflation rate (food 25.3 per cent and core inflation 20.3 per cent rates.) and fuel price (140 per cent increase after subsidy removal).
“Business revenues may decline in the short-term, mainly due to direct impact input costs and reduction in disposable incomes.
“Rise in energy, food, transportation, and import costs may dampen consumer spending on non-discretionary items.”
The report added that economic reforms such as the FX market liberalisation could gradually attract foreign investments and boost capital inflows in the long term.
According to PwC, in the short run, investors will likely adopt a wait-and-see approach, which may be a result of the absence of further reforms to strengthen business and economic fundamentals.
It read further, “Inflation is expected to rise in the short to medium-term.
“Consumers are expected to be pressured by higher prices, causing demand to slow down.
“Wage adjustments unlikely to be adjusted simultaneously and proportionately.”
The report also noted that naira floating was expected to drive up the cost of imported raw materials, adding that the naira value since the implementation of the policy had ranged between N472/$ and N771/$ from an average of N463/$ in May before the policy announcement.
It further noted that the proposed new ministerial cabinet would drive economic direction and fiscal policy management.
