Olawale Samuel and Gbolagade Sunday
Inflation in Nigeria is a prevalent issue at which the price of goods and services in an economy increases. Hence, stagflation refers to an economy that has inflation, a slow or stagnant economic growth rate, and a relatively high unemployment rate. With stagflation, a country’s citizens are affected by high rates of inflation and unemployment. The historical record of stagflation is traceable to the 1970’s mandate which has been corrected a little by the policy tagged “maxims of dual policy”( which can only achieve its objectives on three phases which are stability of price, maximum employment and maintenance of long term interest rate using federal reserves act ) these are the content of the mandate policy adopted to generate a solution to a state of where prices of goods are fluctuating with increment as well as unemployment.
Drawing a line of comparison from years back (1970-2020) we will be able to deduce that economical Structures has remained dormant which include the whole business scene of marketing system which will always make a country’s development lacks it true determining element. Using hypothetical examples of “Rice” which is widely consumed for personal growth and energy. It price flows between the rate of #16,000 to # 24,000( current price) where the characteristics that determine the point development are suffering from the servitude of life sustenance
Moreover, the difference in the conceptual discourse between economic growth ( the sum total of economic activity i.e increase in The gross domestic product )and economic development(a situation where an emerged economic become an advance economic with a high level of qualitative living tactics) The determining feature of economic status is a phenomenon that can only be understood when an increase in GDP can determine the successive development in a developed country.
Comparing the economic structure of a well-developed and developing country i.e United State of America ( U.S.A) and NIGERIA respectively using the monetary categories, technological advancement and social well being of citizens. The relationship between countries to countries ( foreign policy)like the U.S transact with the dollar($) in purchasing crude oil from Nigeria is dwindling.
In Nigeria, economical survival is a struggle for and achieved through just one focus natural resource called “Crude oil” which is extracted from oloibiri in Nigeria, Research work has shown that Nigeria has a total of 179 oil fields and 1481 well in operation according to ( Department of petroleum resources).
Right from date, Nigeria public sector ( National, regional and local ) archive it aims from the allocated money from a statutory account which includes money or revenue gained from ( Crude oil, Tax, and other means) but crude oil has the largest portion because that is the originator and where Nigeria economic development relies on irrespective of the amount of crude oil sold the citizens needed service is not met.
Stagflation, in this view, is caused by cost-push inflation. Cost-push inflation occurs when some force or condition increases the costs of production. This could be caused by government policies (such as taxes) or from purely external factors such as a shortage of natural resources or an act of war and pandemic.Thus, 3 key factors need to be analysed which are Recession, Depression and Stagflation. Recession is prolonged economic contraction, depression is deep, long-lasting recession, and stagflation is a decline in real GDP combined with a rise in inflation.
According to a report by leading American consultancy from McKinsey & Company ” The subsequent economics fallout for Nigerian will be severe, GDP forecast are suggesting that if oil prices stay low, GDP growth will be 3.4 per cent but since there is fall in the price of Crude oil( especially during this time of virus pandemic) there is will be hardened in Nigeria economic sustainability, hardness like inflation on other consuming product in other to gain more money or revenue in circulation for political, economical purposes but we should consider that amidst many natural resources that Nigeria has, she depends only on crude oil and this will make this period of fall in price to affect the marketing or business system of the country ( even though they are still struggling with it when the price has not yet fallen).
In a bit of time, Nigeria economical structure will be ramshackle and depilated because there will be low development, an incessant increase in the price of commodities, unemployment (if the country contains the pandemic quick), affected budget for 2023, etc but most the burden will be on the citizens.
Therefore, what are the possible Solutions to Stagflation (17 April 2017 ) by Tejvan Pettinger Stagflation occurs when there is an increase in inflation and also at the same time an increase in unemployment and lower economic growth. It is not easy. For example, the Central Bank could use Monetary policy to try and reduce inflation. Higher Interest rates increase the cost of borrowing and this will reduce aggregate demand (AD). This will be effective for reducing inflation, but, it will cause a bigger fall in GDP. Therefore, the Central Bank may be reluctant to target inflation when growth is already low.
One solution to stagflation is to increase aggregate supply (AS) through supply-side policies, for example, privatisation and deregulation to increase efficiency and reduce costs of production. However, these will take a long time. Also, if the cost-push inflation occurs because of a global increase in the price of oil and food, there is little that the government can do about it. There are concerns about stagflation in Nigeria but a solution is not easy.