The National Bureau of Statistics officially confirms that Nigeria’s economy is in recession
| By Anayo Ezugwu |
THE National Bureau of Statistics, NBS, has confirmed that the Nigerian economy is in recession. Figures released by the NBS on Wednesday, August 31, has shown that the second quarter 2016 Gross Domestic Product, GDP, declined by -2.06 percent.
Nigeria has now recorded two consecutive quarters of declining growth in GDP, which is the usual definition of recession. The NBS, in its GDP report for the second quarter of 2016, stated that Nigeria’s second quarter GDP was lower by 1.70 percent points from a negative growth rate 0.36 percent recorded in the preceding quarter.
The figure is lower by 4.41 percent points from the growth rate of 2.35 percent recorded in the corresponding quarter of 2015. In nominal terms, the NBS stated that second quarter GDP was N23.484 trillion at basic prices, 2.73 percent higher than second quarter 2015 value of N22.859 trillion. This growth, the NBS said, was lower than the rate recorded in the second quarter of 2015 by 2.44 per cent points.
The NBS also stated that during the second quarter, oil production stood at 1.69 million barrels per day (mbpd), dropping by 0.42 million barrels per day from production in the first quarter of 2016, and also representing a decline of 0.36 million barrels per day from the 2.05 million barrels per day crude oil production recorded in the second quarter of 2015. “As a result, real growth in the oil sector was negative 17.48 percent (year-on-year) in the Second Quarter of 2016. Growth declined by 10.68 percent points and 15.59 percent points relative to growth in the second quarter of 2015 and first quarter of 2016, respectively. Quarter-on-Quarter, growth also slowed by -19.11 percent.
“As a share of the economy, the oil sector contributed 8.26 percent to total real GDP, down from the contribution recorded in the corresponding period of 2015 and the first quarter of 2016 by 1.54 percent points and 2.03 percent points, respectively. Growth in the non-oil sector was largely driven by the following seven activities of agriculture, information and communication, water supply, arts entertainment and recreation, professional scientific and technical services, education and other services which all grew positively while the remaining 19 major sectors, many of which are substantially indirectly dependent on the oil sector recorded negative growth.
“The non-oil sector, accordingly, declined by 0.38 percent in real terms in the second quarter of 2016. This growth rate was 0.20 percent points lower than the first quarter of 2016 (-0.18 percent), and 3.84 percent points lower from the corresponding quarter in 2015 (3.46 percent). In real terms, the non-oil sector contributed 91.74 percent to the nation’s GDP, higher from shares recorded in the first quarter of 2016 (89.71 percent) and the second quarter of 2015 (90.20 percent).”
Despite the figures confirming Nigeria’s worst economic recession in over a decade, the federal government on Wednesday, August 31, said it remained optimistic of a turnaround. The presidency said although the GDP figures released by the NBS in its 2016 second quarter confirmed a temporary decline in the economy, it also indicated hopeful expectation in the country’s economic trajectory.
A statement from the office of Yemi Osinbajo, vice president, said beside the growth in the agriculture and solid mineral sectors, the Nigerian economy was doing better than estimates from the International Monetary Fund, IMF. The Vice President said with the present administration’s policies, there were clear indications the second half of the year would be even much better.
“The Buhari presidency will continue to work diligently on the economy and engage with all stakeholders to ensure that beneficial policy initiatives are actively pursued and the dividends delivered to the Nigerian people,” he said.
In his reaction to the NBS report, Adeyemi Dipeolu, special adviser to the president on Economic Matters, said, “A close look at the data (released by the NBS) shows that this outcome was mostly due to a sharp contraction in the oil sector, due to huge losses of crude oil production as a result of vandalisation and sabotage. However, the rest of the second quarter data is beginning to tell a different story. There was growth in the agricultural and solid minerals sectors, which are the areas in which the Federal Government has placed particular priority.”
The IMF had on Tuesday, July 19, forecasted that the Nigeria economy was likely to contract by 1.8 percent this year, warning that it was heading towards recession. The IMF released its forecast on Nigeria in its latest World Economic Outlook, WEO, entitled: “Uncertainty in the Aftermath of the UK Referendum,” posted on its website.
The nine-page global report showed that Nigeria’s growth projection for this year was revised downwards, from the 2.3 percent it had forecast in its April report. It also forecasts a 1.1 percent growth for Nigeria in 2017, down from the 3.5 percent it made in April.
“The outlook for other emerging markets and developing economies remains diverse. Growth projections were revised down substantially in sub-Saharan Africa, reflecting challenging macroeconomic conditions in its largest economies, which are adjusting to lower commodity revenues.
“In Nigeria, economic activity is now projected to contract in 2016, as the economy adjusts to foreign currency shortages as a result of lower oil receipts, low power generation, and weak investor confidence. These revisions for the largest low-income country are the main reason for the downgrade in growth prospects for the low-income developing countries’ group,” the IMF said.
— Sep 1, 2016 @ 8:45 GMT