Nigeria hurtles towards recession as economy shrinks by 6.1% in Q2

Nigeria economy recorded 1.87% growth in Q1

It is official. Nigeria’s economy is headed towards a steep deceleration after the economy contracted by 6.1 per cent between April and June, 2020.

According to the National Bureau of Statistics, NBS report released on Monday, “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.”

“When compared with Q2 2019, which recorded a growth of 2.12 per cent, the Q2 2020 growth rate indicates a drop of –8.22 per cent points, and a fall of –7.97 per cent points when compared to the first quarter of 2020 (1.87 per cent).

“Consequently, for the first half of 2020, real GDP declined by –2.18 per cent year on year, compared with 2.11 per cent recorded in the first half of 2019. Quarter on quarter, real GDP decreased by –5.04 per cent. Furthermore, only 13 activities recorded positive real growth compared to 30 in the preceding quarter,” the NBS said.

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Crude oil production was 1.81 million barrels a day in the second quarter, compared with 1.98 in the same 2019 period, the report said.

Nigeria’s economy was already grappling with sluggish growth before the pandemic in the wake of a 2016 recession. The International Monetary Fund (IMF) has said it sees Nigeria’s GDP falling 5.4 per cent this year, and the government expects the economy to shrink by as much as 8.9 per cent before the end of 2020.

Recall that the NBS released the unemployment figures last week which showed that the country’s jobless rate stood at 27.1 per cent in the second quarter.

Meanwhile, inflation rose for the 11th straight month in July, to 12.82 per cent – its highest level in more than two years.

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Nigeria’s economy recorded a marginal growth of 1.87 per cent in Q1, 2020, which meant that the economy could not withstand the strong impact of the coronavirus.

As at today, the economy is limping on a foot as many sectors remain shut due to the fear of COVID-19 spread.

Analysts foresee that the economy will slide into a full-blown recession in Q3, especially with companies forced to shed jobs, inflation rising and foreign exchange scarcity worsening the impact of naira devaluation.