Manufacturers will suffer shocks from the rising cost of diesel, foreign exchange illiquidity in Q2 – LCCI
3 min readThe Lagos Chamber of Commerce and Sector (LCCI) has warned that heading into the second quarter of 2022, the manufacturing sector will very likely put up with some shocks from the increasing cost of diesel, logistics, foreign exchange illiquidity and other people thanks to the Russian-Ukraine war which has activated provide chain concerns in the electricity and agriculture markets.
This was disclosed by LCCI’s President, Dr Michael Olawale-Cole, at the LCCI Quarterly press conference on the point out of the Nigerian economic system on Tuesday in Lagos.
The LCCI also warned about shrinking production of items for Nigerian manufacturers as they attempt to alter to the bottlenecks produced by the conflict.
What they are indicating
The LCCI warned that if the war carries on, Nigerian makers would be hit by reduced productiveness as access to raw components declines and growing charges of diesel proceeds to impact functions.
Olawale-Cole reported, “Occupation losses are also quite probable thanks to constrained generation and disrupted provide chains and all of these will very likely depress growth likely in Q2 2022.
“Going into the second quarter of 2022, the producing sector will possible endure some shocks from the growing price tag of diesel, logistics, international exchange illiquidity, domestic inflationary tension, weakening purchasing ability, bad public infrastructure and port-linked issues.
“These may possibly continue to current as headwinds to the sector’s general performance.
“Additionally, with the war in Ukraine aggravating disruptions to supply chains of raw elements like wheat, barley, soybeans, sunflower, and corn, the increasing charge of production could not abate before long.”
He warned that Nigerians should really hope headline inflation to continue being elevated, citing source chain disruptions prompted by the Russia-Ukraine war, food stuff supply shocks, Fx guidelines, larger strength costs, Forex illiquidity, heightened insecurity in key foods-creating states, which would go on to mount stress on customer selling prices.
“We think a broad-based harmonisation of fiscal and financial procedures towards addressing the determined structural constraints will considerably enable average inflationary force in the short expression.
“It has also become critical now that Nigeria desires to have reserves for these critical commodities to meet unexpected crashes in provide.
“We have generally advocated the removing of gas subsidies and that these rescued money be diverted to subsidise the creation of products and expert services in the facial area of the growing cost of producing.
“The Central Lender of Nigeria (CBN) need to embark on easing the economy whilst maintaining a tab on managing rising charges.
“Credit to the private sector should really enhance and be qualified to aid expansion sectors and export-marketing sectors,” he extra.
In case you skipped it
Nairametrics noted earlier that Ayobami Omole, an Fairness and Thematic Study Analyst at Tellimer Investigate mentioned that the high expense of diesel, partly triggered by the Russian invasion of Ukraine, and impacting negatively on the producing sector in Nigeria is set to thrust Nigeria’s inflation for Q2 close to the 16% amount.