Yemi Kale explains Okonjo-Iweala’s economic stability comment

Group Chief Economist and Managing Director of Afreximbank, Dr. Yemi Kale, has explained to Nigerians what economic stability stands for in economic context.

Reacting to Okonjo Iweala’s comments on his X handle on Saturday, Kale clarified why economic assessments might seem disconnected from the reality of citizens facing high costs and economic challenges.

This came after WTO Director-General Ngozi Okonjo-Iweala described Nigeria’s economy as “now stable” following her meeting with President Bola Tinubu. Many Nigerians questioned this claim, citing rising costs for food, housing, transportation, and healthcare.

He emphasised that “economic stability” is a technical term that doesn’t guarantee immediate relief for households.

Kale defines economic stability as a condition where key macroeconomic indicators—like inflation, exchange rates, and GDP growth—no longer fluctuate sharply.

He said that if inflation falls from 25% to 12% and stays there, the economy is deemed “stable,” even if prices remain high compared to previous years, stressing that stability indicates predictability and a reduced risk of disruptions, instilling confidence in businesses, investors, and consumers to make long-term plans.

Kale, however, pointed out that this does not necessarily mean that citizens are free from financial hardships. ”I try to stay away from unnecessary debates, but let me offer my view from a purely technical & economic perspective, for education purposes only, to recent debates that were unnecessary.

”When economists say ‘an economy is now stable’, they usually mean that the 1/10 economy has reached a point where it is no longer experiencing major fluctuations/ disruptions. In practical terms, it suggests Macroeconomic Indicators are steady”, he said.

Kale noted that the difference between stability and improved living standards lies in the timing and distribution of benefits. He explained that stability typically occurs after a crisis, like a currency crash or hyperinflation, signaling that the worst has ended.

COURTESY: vavalue.com