Amid rising debt profile, inflation and unemployment, Nigeria, Africa’s biggest economy, has entered its second recession in five years as official figures published on Saturday showed that the economy shrank again in the third quarter of this year.
This year’s recession is the worst in 36 years as data obtained from the World Bank showed that the country’s GDP dropped by 10.92 per cent in 1983 and 1.2 per cent in 1984.
The World Bank said in June that the collapse in crude oil prices, coupled with the COVID-19 pandemic was expected to “plunge the Nigerian economy into a severe recession, the worst since the 1980s”.
The NBS, in its Gross Domestic Product report for Q3, said the GDP, the broadest measure of economic prosperity, fell by 3.62 per cent in the three months up till September.
For the first time in more than three years, the Nigerian economy shrank in Q2 as the GDP fell by 6.10 per cent, compared with a growth of 1.87 per cent in Q1.
Economists consider two consecutive quarters of shrinking GDP as the technical definition of a recession.
“The performance of the economy in Q3 2020 reflected residual effects of the restrictions to movement and economic activity implemented across the country in early Q2 in response to the COVID-19 pandemic,” the NBS said.
It said as the restrictions were lifted, businesses reopened and international travel and trading activities resumed, some economic activities had returned to positive growth.
“A total of 18 economic activities recorded positive growth in Q3 2020, compared to 13 activities in Q2 2020,” it added.
The statistics office said aggregate GDP stood at N39.09tn in nominal terms and N17.82tn in real terms in the period under review.
According to the National Bureau of Statistics (NBS), the country’s official data agency, Nigeria has recorded a second recession in the Buhari’s administration.
According to NBS, Nigeria slipped into recession at the end of the third quarter (Q3) which ended in September.
African Examiner reports that Nigeria went into a recession in 2016 after a lull in economic activities due to the delay in the appointment of ministers and other key appointees after President Buhari assumed office in 2015.
The NBS stated that the recession is the worst since 1987 because the Gross Domestic Product in real terms declined by -3.62% (year-on-year) in the third quarter of 2020 and is driven by the long closure of the Nigerian borders which stopped economic movements across the borders.
“Nigeria’s gross domestic product (GDP) recorded a growth rate of –3.62% (year-on-year) in real terms in the third quarter of 2020,” NBS disclosed on Saturday.
“Cumulatively, the economy has contracted by -2.48% While this represents an improvement of 2.48% points over the –6.10% growth rate recorded in the preceding quarter (Q2 2020), it also indicates that two consecutive quarters of negative growth have been recorded in 2020.
“Furthermore, growth in Q3 2020 was slower by 5.90% points when compared to the third quarter of 2019 which recorded a real growth rate of 2.28% year on year.
“The performance of the economy in Q3 2020 reflected residual effects of the restrictions to movement and economic activity implemented across the country in early Q2 in response to the COVID-19 pandemic.
“As these restrictions were lifted, businesses re-opened and international travel and trading activities resumed, some economic activities have returned to positive growth. A total of 18 economic activities recorded positive growth in Q3 2020, compared to 13 activities in Q2 2020.”
The report also disclosed that during the quarter under review, aggregate GDP was at N39,089,460.61 million in nominal terms, saying that the performance was 3.39% higher when compared to the third quarter of 2019 which had an aggregate of N37,806,924.41 million.
It stated: “This rate was, however, lower relative to growth recorded in the third quarter of 2019 by –9.91% points but higher than the proceeding quarter by 6.19% points.
“For clarity, the Nigerian economy has been broadly classified into the oil and non-oil sectors: The contract mark the beginning of a full-blown recession and second consecutive contraction from -6.10 per cent recorded in the previous quarter of this year.”
According to the report, oil GDP contracted by -13.89 per cent from -6.63 per cent in the second quarter of this year and 6.49 per cent in Q3 2019 and also Nigeria’s non-Oil GDP contracted -2.51 per cent from -6.05 per cent in Q2 2020 and 1.85 per cent in Q3 2019 Information & Communication under Services GDP grew 14.56 per cent compared to 16.52 per cent in Q2 2020 and 9.88 per cent in Q3 2019.
Services real GDP contracted by -5.49 per cent compared to -6.78 per cent in Q2 2020 and 1.87 per cent in Q3 2019 while the construction under Industry real GDP went up by -2.84 per cent compared to -31.77 per cent in Q2 2020 and 2.37 per cent in Q3 2019.