Against the backdrop of adverse Gross Domestic Product, GDP figures reported for the second quarter of 2020, Q2’ 20, many industry leaders have painted a gloomy picture of the implications.
GDP report of the Nigerian Bureau of Statistics (NBS) released showed economic downturn of 6.1%. The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture report reflected total economic closure in the quarter while Nigeria Employers’ Consultative Association (NECA) warned that the economy is sliding towards pre-2016 recession.
The pandemic has also affected the global price of crude oil and consequently a negative impact on government revenue and foreign exchange reserves. The Director-General, NACCIMA, Amb. Ayo Olukanni said “This index reflects the near total closure of the Nigerian economy for the months of April to June 2020. The covid-19 pandemic during the period, led to workforce depletion, either through conavirus infection or the mitigation policies of social distancing and isolation to stop the rapid spread.
“We project that by the end of the year, Nigeria would “officially” be in the state of economic recession with the speed of recovery (as always) depending on government policies” according to Director-General, NACCIMA, Amb. Ayo Olukanni.
Director-General, NECA, Dr. Timothy Olawale said: The economic data released by NBS is a call to urgent action. The economic contraction, leaving GDP growth rate at 6.1% is not only alarming but also worrisome.
Proposing a way out of the downward slide, Olawale urged government to “take a bold step in stopping the slide by refocusing monetary and fiscal policies to support economic sectors that have potential for large scale production and employment as a means to kick-start the economy and arrest the negative growth; foreign exchange should be channeled to th real and productive sectors in the value chain along with it; total deregulation of the downstream oil sector and a more deliberate effort at curbing wastage and leakages in government”.
David Adonri, Executive Vice-chairman, High Cap. Securities Ltd, said: “The GDP growth rate will be negative in Q3, indicating a recession, is a foregone conclusion. IMF’s forecast for GDP growth rate at year end is -5.4%”.
“Inflation rate has risen in Nigeria for ten straight months, moving steadily from 11.02% in June 2020. It is expected to reach 15% in December 2020 according to the forecast made in recent Nigeria Economic Sustainability Plan (NESP).
“This is the second time in five years and under the same administration that Nigeria’s economy is falling into stagflation. Signs of weakness in the economy were apparent in Nigeria before onset of covid-19 in February 2020.
Vanguard, August 26 2020
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