The Israel-Iran war poses hazards to Nigeria’s economy- CPPE

The Centre for the Promotion of Private Enterprise (CPPE) on Sunday said the war between Israel and Iran portends a combination of risks and upsides for the Nigerian economy.

In a statement signed by Muda Yusuf, director of CPPE, the think tank said the outbreak has added a troubling dimension to the challenges of an already floundering global economy.

“For the Nigerian economy, the implications are mixed. The development portends a combination of risks and upsides for the economy,” Mr Yusuf said.
On Friday morning, Israel launched air strikes on Iran. Israel claimed the strikes were pre-emptive to prevent Iran from building a nuclear bomb, but many countries consider the strike as unprovoked, as talks were still ongoing between Iran and the US over Iran’s nuclear programme, which it says is for peaceful means.

In his statement on Sunday, Mr Yusuf said if the current conflict persists and escalates, the Nigerian economy may record upsides in forex inflows, revenue effect and oil and gas investment effect.
He explained that a major driver of energy prices in Nigeria is the global crude oil price.

Mr Yusuf added that the surge in crude oil price would impact on foreign exchange earnings, oil being the biggest forex earner for the country.

This, he said, would even be more impactful if output performance improves.
“Crude oil price has surged to $75 per which is about 15 per cent higher than before the outbreak of the Israeli–Iran conflict. This development would also positively impact the country’s foreign reserves, ensure better forex liquidity and ultimately the stability of the naira exchange rate,” he said.

According to him, the oil sector currently accounts for about 50 per cent of government revenue.

He added that an improvement in crude oil price would therefore have a significant impact on government revenue.
Mr Yusuf said with the outbreak of the Israeli-Iranian war, crude oil prices had surged to $75 per barrel from $65 per barrel a week before. This is a 15 per cent jump within days.

“This has obvious implications for petroleum product prices globally.”

According to him, economies around the world including Nigeria would witness a surge in the price of petrol, diesel, jet fuel, gas and related products in the near term.

“This would have far reaching implications for many economies and businesses,” he said.

Source: premiumtimesng.com

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