Amid the major challenges posed by the outbreak of COVID-19 pandemic and existing vulnerabilities, the Nigerian economy recorded negative growth in real Gross Domestic Product (GDP) in the second quarter (Q2) of 2020, a development experts say was expected.
Analysts urged government to formulate policies that would attract foreign investments as a way to spur a faster recovery of the economy.
“This appears to be in line with global expectations as we have seen similar trends recently in countries like UK and Japan,” says Professor of capital market at Nasarawa State University, Uche Uwaleke.
For the managing director of Afrinvest Capital, Ayodeji Ebo, the figures are in line with expectations as he expressed optimism that there would be improvement in the economy in the third quarter as oil price picks up and the economy opens fully.
Latest data that was released by the National Bureau of Statistics (NBS) yesterday, showed that Nigeria’s economy contracted by –6.10 per cent (year-on-year) in real terms in the second quarter of 2020, ending the three-year trend of low but positive real growth rates recorded since the 2016/17 recession.
The GDP figure showed that the oil sector plummeted significantly, contracting by 6.63 per cent year on year compared to growth of 7.17 per cent in Q2 2019. The NBS estimated crude oil production during the three months to be 1.81mb/d, 10.4 per cent lower relative to the comparable period of 2019. The sector contributed 8.93 per cent of total GDP in Q2, 2020 compared to 8.98 per cent in the comparable period of 2019.
The decline is attributable to lower levels of both domestic and international economic activities during the quarter, which resulted from nationwide shutdown in an effort to contain the spread of COVID-19.
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.
In the quarter under review, aggregate GDP stood at N34,023,197.60 million in nominal terms, or -2.8 per cent lower than the second quarter of 2019 which recorded an aggregate of N35,001,877.95 million.
Overall, the nominal growth rate was –16.81 per cent points lower than recorded in the second quarter of 2019, and –14.81 per cent points lower than recorded in the first quarter of 2020.
According to the NBS report, the Agriculture sector managed to eke out a growth rate of 1.58 per cent, while manufacturing, trade and so many other sectors recorded negative growth.
Those who spoke to our correspondent on the development called for full and aggressive implantation of the nation’s 2020 budget, with a special focus on real and manufacturing sectors for job creation.
Economic expert, Stephen Kanabe calls for prioritisation of economic activities to trigger recovery for the economy.
“Government needs to look into the looming food crisis largely responsible for skyrocketing inflation rate in the country. Government should feel compelled to deal with the issue of herdsmen versus farmers’ crisis to allow for full farm activities,” he said.
“We must as a country deal with the problem of unemployment and insecurity.”
Prof. Uwaleke on his part said: “To ensure, the impact of these economic headwinds are moderated, it is important to increase the size of the various interventions by the government and the CBN and ensure they are well targeted and implemented.”
Ebo noted that it is paramount for government to formulate policies that will attract investors both foreign and local as well as boost productivity.
To him, “Government needs to look at policies that would be attractive to foreign portfolio investors as well as local investors because government cannot do it alone.”