There are indications that a second recession in five years is inevitable, as profits of nearly half of the largest companies on the Nigerian bourse slumped as coronavirus dented the economy.
The economic fallout from the corona virus pandemic and the sudden crash in oil price have unprecedented financial and social disruptions.
Also, the lockdown imposed by the government to curb the spread of the virus has dealt a great blow on sales and supply chain and the devaluation of the currency could balloon foreign debt in the capital structure of some entities, putting further pressure on earnings.
Gbolahan Ologunro, and equity research analyst at CSL Stockbrokers said, “Even aside corporate performance, series of data so far shows the country is at the verge of recession. Even sectors such as banks and telecoms would also feel the pinch”.
Interestingly, Seplat, Unilever, Guinness, Total Oil Nigeria, International Breweries and Julius Berger posted combined losses of N63.11 billion as at June 2020.
Nigeria’s biggest banks are not spared the pang of the headwinds as they posted their slowest profit growth in five years on the back of rising bad loans.
The jobless rate rose to 27.1% in the Q2, the highest in at least a decade, according to the Bureau.
The IMF has announced that the Nigerian economy would witness a deeper contraction of 5.4% and not the 3.4% it projected in April 2020.
According to the foreign trade in goods statistics released by the NBS, the total value of Nigeria’s merchandise trade declined by 27% to N6.2 trillion in the Q2 2020 from N8.6 trillion in the Q1 2020.
Business Day, 9 September 2020
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