International Economics: IB Economics

This article looks at the current state of the Nigerian economy - with inflation running at 30%, the naira having depreciated by two-thirds, with the pegging of the naira to the dollar having been abandoned and many households facing a cost of living crisis. 

However,  whilst President Tinubu is bearing the brunt of the blame, it's arguably the case that he's being blamed for the sins of his predecessors.

Prior to being scrapped, Nigeria's fuel subsidy accounted for 15% of government spending, more than was spent of education and healthcare. Equally, the pegging of the currency had a significant opportunity cost. Additionally, the previous Buhari government had stoked inflation by asking the central bank for a $19billion loan - financed by printing money.

As a result, the Tinubu camp are arguing that drastic measures, and a period of suffering are necessary to allow the economy to recover, and that greater emphasis on the free market will pay substantial dividends in future.

Inflation is not just something affecting the developed world. Nigerian inflation has reached an 18 year-high. The rise in inflation has come about because of President Tinubu's reforms notably abandoning fuel subsidies and removing exchange controls, both of which have contributed to food prices rising. 

The President believes that these reforms are necessary to improve market efficiency, and that in the long-term they will be beneficial. However, in the short-term, the cost of living crisis triggered has seen the costs of inflation fall most heavily on the poor which has been controversial, with unions threatening to strike.  

This Reuters clip looks at the reforms associated with President Bola Tinubu have stalled - the relaxation of foreign exchange controls has seen the naira depreciate, a widening of the official and black market exchange rate, with potentially inflationary effects, and the removal of the fuel subsidy hasn't seen fuel prices budge in the last 3 months. In short, much of the optimism associated with the new President has evaporated, with little in the way of FDI, largely because there's nervousness about being able to get dollars out of country.  

This sort of article is economic gold dust: it could be microeconomic, looking at the effect of removing fuel subsidies and efficiency, or macroeconomic, looking at how microeconomic policy has macroeconomic implications, notably for economic growth, the efficient functioning of labour markets and unemployment, or even developmental economics, because of the impact of the policy of living standards.

An excellent beginning of term starter for Year 13 perhaps, getting them to revise issues that you've looked at last year?