Nigeria, Africa’s largest economy, could be caught off guard if a global recession hits in 2023. This is especially true for the country’s energy sector, according to mr. Chijioke Nwaozuzu, an energy economist and director of the Emerald Energy Institute.
Amid ongoing debate about a possible global recession next year, Nigeria’s energy sector would take a nap if a recession hits. He said there were signs that the global economy could slip into recession by 2023 in the short to medium term, all things being equal.
“Historically, previous recessions have been preceded by periods of slower global growth, higher inflationary trends and tighter monetary policy.
“Additionally, slowing growth in China’s real estate sector and stringent Covid-19 restrictions in major Chinese cities have resulted in soaring energy and food prices, partly due to the effects of the war between Russia and Ukraine. The slowdown in economic production as a global economy is ultimately weighing on the country’s GDP outlook.Similarly, rising energy prices in Europe will affect production processes and thus overall performance.
Energy economists say the United States, China, and the Eurozone account for more than a third of global economic output, so slowing economic growth in these countries will affect the global economy. expected.
“Thus, due to the above issues, the International Monetary Fund (IMF) expects global economic output (GDP) to fall from a forecast of 6.0% in 2021 to 3.2% in 2022, and to 2.9% by 2023. I expected it to drop,” he said.
But he said caution should be exercised when forecasting recessions.
“Changes in the Chinese economy, such as the easing of stringent Covid-19 restrictions, for example, could support economic activity and, in turn, overall production. Even with a ceasefire, it could alter global productivity and manufacturing dynamics, and could also impact rising energy and food prices.
Nwaozzu said otherwise, saying that despite huge investments in the energy sector, the country’s energy infrastructure is inadequate, inefficient and powerless to meet current energy demands. pointed out something.
“For more than a decade, Nigeria’s energy system ‘power sector’ has failed to generate more than 3.5 GW of electricity. Worse, it results in constant grid outages and high transmission losses. Weak transmission systems limit the amount of electricity that can be transmitted from power plants, so Nigeria’s energy sector is not prepared for a global recession by 2023,” he said.
Given this scenario, Nwaozuzu believes that Nigeria’s energy sector must not only prepare for future recessions, but must first meet the country’s current needs and then strive to align with the direction of the global energy sector. said there is
“Focused efforts and investments need to be made to prepare the sector for the transition in line with the Sustainable Development Goals of the global energy industry,” he said.
advocated investing part of the proceeds from the sale of surplus crude oil in infrastructure development