BREAKING NEWS: Nigerian economy enters recession
The Nigerian economy has slipped into its second recession in five years as the gross domestic product contracted for the second consecutive quarter in 2020.
The National Bureau of Statistics (NBS) on Saturday disclosed that Nigeria’s GDP growth was negative by 3.62 per cent in the third quarter of 2020.
Recall that the country recorded a 6.10 per cent contraction in the immediately preceding quarter.
It is the nation’s second recession since 2016, and the worst economic decline in almost four decades.
Since the corona pandemic, the country’s economy has been severely affected. This is in addition to the already existing fiscal constraint of the economy. The Nigerian economy has been battered by the coronavirus pandemic, which caused a significant decline in oil revenues as global economic activities stalled for months.
The governments of Nigeria at all levels rely on crude oil for nearly 90 per cent for their expenditure. The sector, however, contributes less than 10 per cent to the GDP. It contributed just 8.73 per cent to the economy in the latest report.
The fall in the relevance of the oil sector may not be unconnected to the recent fall in oil production in the country. For instance, production fell to 1.67 million barrels a day from 1.81 million barrels in the second quarter of 2020. Bloomberg says the lowest since the third quarter in 2016 when the economy last experienced a recession.
Early this yar the World Bank has predicted the Nigerian economy will contract by 3.2 per cent in 2020, assuming the spread of COVID-19 is contained by the third quarter. The International Monetary Fund forecast a contraction of 4.3 per cent.
The pre-pandemic prediction for the Nigerian economy was for it to grow by 2.1% in 2020.
The coronavirus coupled with the closure of border the country record sustained inflation for more than two years, with the October figure of 14.25 per cent the highest in the last 30 months.
The Central Bank of Nigeria in September cut interest rates to 11.5 per cent to help boost borrowing and support the economy. It was the second reduction in months.
The latest development is likely to trigger a further cut of the policy rate. The monetary policy committee, which sets the rate, is to beging its two-day meeting on Monday.