Nigeria’s Gross Domestic Product (GDP) decreased by six percent in real terms in the second quarter of 2020, according to the Nigeria Bureau of Statistics.
This was contained in the NBS’s GDP report published on Monday.
The retreat ends a three-year trend of low but positive real growth rates recorded since the national economy emerged from recession in 2017.
According to the NBS, the decline was “largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.”
Nigeria essentially shut down its economy in March – restricting inter-state travel, closing worship centres, schools and markets – as parts of efforts to keep the spread of the novel coronavirus under control.
“The efforts, led by both the Federal and State governments, evolved over the course of the quarter and persisted throughout,” the NBS said.
The oil sector, which accounts for a large percentage of the country’s revenues, recorded negative growth of 6.63 percent, “indicating a decrease of –13.80%
points relative to the rate recorded in the corresponding quarter of 2019.”
The non-oil sector also declined by 6.05% in real terms during the second quarter.
“It was the first decline in real non-oil GDP growth rate since Q3 2017,” the NBS said.
The economy’s decline did not come as a surprise to many as the coronavirus pandemic has gutted economic productivity across the world.
The report will be “negative,” Presidential aide, Tolu Ogunlesi, tweeted on Sunday. “Tomorrow we find out to what degree.”
The third-quarter results have also been projected to be negative, which will officially land the economy in a recession.
A recession is only declared after two consecutive quarterly contractions.
In May, Finance Minister, Zainab Ahmed, predicted that the country was heading towards a recession.
“On the economy, COVID-19 has resulted in the collapse in oil prices,” she said after a National Economic Summit meeting. “This will impact negatively, and the impact has already started showing on the federation’s revenues and on the foreign exchange earnings.”
Notable economist and adviser to the Federal Government, Bismarck Rewane, said the NBS report was “surprising and concerning” but not “alarming at this point in time.”
“The truth is that the economy had its pre-existing conditions in Q1 and the lag between the slow down and the contraction was underestimated by all analysts,” Mr Rewane said in an interview with Channels Television on Monday.
He pointed out that the Federal Government’s stimulus plan for the economy was inadequate to cover for the shortfall recorded by the NBS.
“We have a N2.5trn equipment to fight a 12trn contraction,” he said. “So the limitations and inadequacies and inappropriateness of the tools, compared to the problem we have, is stacked.
“So we are saying that the move from a slowdown into a contraction was more than we expected. The tools that we have at our disposal are inadequate. The stimulus that is required to take us out of this equation is going to be much more than we expected. And we are going to have to take some measures.”
Mr Rewane added that the country was now faced with a quadrilemma, a situation in which a choice must be made between four undesirable options.
“The first variable we are looking at is recession, negative growth,” he said. “The second variable is high inflation, which is almost 13 percent.
“The third variable is high unemployment; even though the unemployment numbers are at 28 percent, we think that it is much more than that. And finally, we have weaknesses in currency.
“So we are having external weaknesses and vulnerabilities, slow growth, high unemployment, and, more than anything else, contraction in economic activity.
“Now we are going to move away from the monetary policy complement that we have, stimulate the economy with greater catalyst, and do some things differently.”