The Centre for the Promotion of Private Enterprise (CPPE), has warned on the potential impact of ‘Trump Effect’ on the Nigerian economy.
The body called on the federal government to commit to policy of economic self-reliance and less dependence on other countries in the emerging new global order that is progressively leaning towards economic nationalism, de-globalisation and economic fragmentation.
The CPPE made this call on Sunday in a public statement signed by Muda Yussuf, the CEO, titled “Trump Effect on the Nigerian Economy”.
The body also warned that Nigeria’s 2025 budget benchmark of $75 per barrel crude oil could be threatened by the US President Donald Trump’s commitment to achieving lower global oil price by increasing investments in the production of fossil energy in the USA and potential containment of the Russia war on Ukraine and the Israeli’s war in Gaza.
Dr. Yussuf pointed out that the United States is in a good position to influence global oil output and lower crude oil price in the international market as the world’s largest producer of crude oil with control of 22 per cent global oil production as well as President Trump’s recent signing of an Executive Order creating the National Energy Dominance Council.
Yusuf said:
“There is a need for the government to commit more to the policy of self-reliance and less import dependence in critical areas of the economy, especially energy, food, pharmaceuticals and security. Excessive import dependence poses a major risk to economic and social security of a country.
“A key lesson from the disruption is that no country should be too dependent on others for its strategic needs. Therefore, there is a need to ensure that policies of government are geared towards ensuring economic resilience that minimises vulnerabilities to external shocks.”
According to him, the emerging new global order is progressively leaning towards economic nationalism, de-globalisation and economic fragmentation.
His words:
“domestic economic policies must be framed within the context of this reality. Nigeria’s trade and industrial policies are very critical to achieving this resilience.
“The government should urgently address current productivity shortcomings in the real sector to make domestic production competitive domestically and internationally.
“Current global developments reinforce the need to protect domestic industries against unfair competition from imports.”
Yusuf highlighted that the Trump’s signing of an Executive Order creating a National Energy Dominance Council to drive the country’s energy dominance agenda and his administration’s commitment to increasing oil output to reduce energy prices in the USA and globally, as well as USA’s global diplomatic clout to get OPEC to boost oil production, end Russia-Ukraine war and the Gaza armed conflict between Israel and Palestinians could increase crude oil supply and weaken its prices in the near term is therefore very high.
“In this context, the crude oil price benchmark of $75 per barrel in the 2025 budget may not hold. This would impact the outlook for government revenue and foreign exchange earnings in 2025.
“This has implications for the outlook for revenue, fiscal deficit, government debt and exchange rate. The current budget benchmark of $75 per barrel may not stand in the circumstances.”
He added that the decision of President Trump to opt out of the climate change agreement [the Paris Accord] also has far reaching consequences for the global oil market.
“This signals less commitment to climate change concerns and the acceleration of more investment in fossil fuels by the USA.
“Additionally, the sweeping imposition of trade tariffs on major US trading partners may weaken the global economic growth outlook, dampen global oil demand and depress oil prices,” Yusuf said.
