Nigeria's economy already in recession - Experts

Ahead of the official release of the Gross Domestic Product (GDP) result for second quarter of 2020, some economists have said the nation’s economy may have already relapsed into recession.

The country recorded a positive growth figure in the first quarter of the year, while the figure for the second quarter is yet to be released by the National Bureau of Statistics (NBS), the official data agency of government.

The experts’ conjecture about the performance of the economy in the second quarter is that the nation may have recorded a negative growth due to the impact of border closure, and the coronavirus pandemic which attacked the price of oil, Nigeria’s main revenue earner, at the international market.

The economic, most of whom had worked for the government and others now working for government as consultants, told The Guardian yesterday that the economy was already in recession.

Emeritus professor and Executive Chairman, African Centre for Shared Development Capacity Building (ACSDCB), Ibadan, Oyo State, Olu Ajakaiye, said: “I will be very surprised if we have not entered recession already in the third quarter because as an oil-dependent nation, once prices dipped by more than 60 per cent, it means a lot of negative impact for us in many aspects, because we are also an import-dependent nation. That fact alone has to do with access to foreign exchange for even imports. That was why the Petroleum Price Regulatory Agency (PPPRA) quickly adjusted the pump price template to align with import cost.

“Again, the NBS, days ago, equally announced its new Labour Force Statistics Survey Report which indicates that the rate of unemployment has grown from 23 per cent to 27 per cent. What all these point to is a possible contraction in productive activity in the economy. Therefore, there is no way we can be envisaging positive outcomes for the GDP for the Q2.

“One thing is certain, and is that we are in recession. But unlike the case in some other Sub-Saharan African countries, our recession may not be deep because of the intervention by the governments by way of palliative distribution to mitigate the hardships," Ajakaiye submitted.

A professor of Finance and Capital Markets at the Nasarawa State University, Uche Uwaleke, agreed with the prediction that recession is certain in the third quarter, as a result of the negative impact of the coronavirus pandemic on productivity and earnings of the country.

Uwaleke advocated increase in the level of the stimuli provided by the government to speed up recovery in the fourth quarter.

“The size of the economic stimulus by the Nigerian government was small. A lot of people were not affected, and even for the few that benefited, the impact would only begin to be felt in the fourth quarter. There’s therefore the need to increase the size of the intervention to ensure that we don’t sip in to the 5.4 per cent predicted by the International Monetary Fund (IMF). That way, recovery would be swift,” Uwaleke advised.

The First Quarter Economic Report indicated that the economy reeled from the effects of COVID-19 pandemic, oil prices plunged downwards following Saudi Arabia’s oil price slash, and the unprecedented disruptions in global supply chains.

“Global stock markets turned bearish as share prices nosedived worldwide. Federally-collected revenue, in the first quarter of 2020, fell below both the quarterly budget estimate and the receipt in the preceding quarter by 36.0 per cent and 4.8 per cent. Provisional Federal Government retained revenue, in the reviewed quarter, was N864.88 billion, while the total estimated expenditure amounted to N2, 327. 80 billion, resulting in an estimated deficit of N1,462.92 billion.”