Product (GDP) decreased by six percent in real terms in the second
quarter of 2020.
Nigeria’s Gross Domestic Product (GDP) decreased by six
percent in real terms in the second quarter of 2020, according to
the Nigeria Bureau of Statistics.
This was contained in the NBS’s GDP report published on
Monday.
The retreat ends a three-year trend of low but positive real
growth rates recorded since the national economy emerged from
recession in 2017.
According to the NBS, the decline was “largely attributable to
significantly lower levels of both domestic and international
economic activity during the quarter, which resulted from
nationwide shutdown efforts aimed at containing the COVID-19
pandemic.”
Nigeria essentially shut down its economy in March – restricting
inter-state travel, closing worship centres, schools and markets –
as parts of efforts to keep the spread of the novel coronavirus
under control.
“The efforts, led by both the Federal and State governments,
evolved over the course of the quarter and persisted throughout,”
the NBS said.
The oil sector, which accounts for a large percentage of the
country’s revenues, recorded negative growth of 6.63 percent,
“indicating a decrease of –13.80% points relative to the rate
recorded in the corresponding quarter of 2019.”
The non-oil sector also declined by 6.05% in real terms during
the second quarter.
“It was the first decline in real non-oil GDP growth rate since
Q3 2017,” the NBS said.
Not a surprise
The economy’s decline did not come as a surprise to many as the
coronavirus pandemic has gutted economic productivity across the
world.
The report will be “negative,” Presidential aide, Tolu Ogunlesi,
tweeted on Sunday. “Tomorrow we find out to what degree.”
Nigeria: Q2 projections are negative.
Tomorrow we find out to what degree.
— tolu ogunlesi (@toluogunlesi) August 23, 2020
The third-quarter results have also been projected to be
negative, which will officially land the economy in a
recession.
A recession is only declared after two consecutive quarterly
contractions.
In May, Finance Minister, Zainab Ahmed, predicted that the
country was heading towards a recession.
“On the economy, COVID-19 has resulted in the collapse in oil
prices,” she said after a National Economic Summit meeting. “This
will impact negatively, and the impact has already started showing
on the federation’s revenues and on the foreign exchange
earnings.”
‘Time To Do Some Things Differently’
Notable economist and adviser to the Federal Government,
Bismarck Rewane, said the NBS report was “surprising and
concerning” but not “alarming at this point in time.”
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“The truth is that the economy had its pre-existing conditions
in Q1 and the lag between the slow down and the contraction was
underestimated by all analysts,” Mr Rewane said in an interview
with Channels Television on Monday.
Rewane, the CEO of Financial Derivatives Company and a member of
the Economic Advisory Council (ECA).
He pointed out that the Federal Government’s stimulus plan for
the economy was inadequate to cover for the shortfall recorded by
the NBS.
“We have a N2.5trn equipment to fight a 12trn contraction,” he
said. “So the limitations and inadequacies and inappropriateness of
the tools, compared to the problem we have, is stacked.
“So we are saying that the move from a slowdown into a
contraction was more than we expected. The tools that we have at
our disposal are inadequate. The stimulus that is required to take
us out of this equation is going to be much more than we expected.
And we are going to have to take some measures.”
Mr Rewane added that the country was now faced with a
quadrilemma, a situation in which a choice must be made
between four undesirable options.
“The first variable we are looking at is recession, negative
growth,” he said. “The second variable is high inflation, which is
almost 13 percent.
“The third variable is high unemployment; even though the
unemployment numbers are at 28 percent, we think that it is much
more than that. And finally, we have weaknesses in currency.
“So we are having external weaknesses and vulnerabilities, slow
growth, high unemployment, and, more than anything else,
contraction in economic activity.
“Now we are going to move away from the monetary policy
complement that we have, stimulate the economy with greater
catalyst, and do some things differently.”
Read more https://swordpress.com.ng/2020/08/24/nigerias-gdp-shrinks-by-6-10-per-cent-in-second-quarter/