Economy sinks deeper into recession

Goods and services produced in Nigeria
between July and September 2016 have
dropped lower as the nation grapples with
economic slow down.
Companies and other economic agents in the
country are producing far below their
capacities as Nigeria’s economic slump
deepened with oil production falling and
factory output hard hit by shortage of foreign
exchange.
Data released yesterday by the National
Bureau of Statistics, signed by its Director-
General, Dr. Yale, showed that the value of
goods and services produced in Nigeria GDP,
in the third quarter of 2016 contracted by 2.2
per cent in the three months through
September from a year earlier, after shrinking
2.1 percent in the second quarter.
Government revenue has also plunged and
foreign currency has become scarcer with the
decline of oil prices, the country’s main
export, since mid-2014, and production fell as
militants in the Niger Delta blew up pipelines.
Crude production fell for the fourth
consecutive quarter to 1.63 million barrels per
day, from 1.69 million barrels in the three
months through June, the statistics office
said.
The oil industry, the report said, contracted by
22 percent from a year earlier. The non-oil
sector, which includes manufacturing, banking
and agriculture, expanded 0.03 percent.
Factory output contracted 4.4 percent, the
third consecutive quarter of decline, and
construction shrank 6.1 percent, the fifth
straight quarterly contraction.
Recession cartoon
‘’Manufacturing was affected by the foreign-
exchange volatility and depreciation of the
naira. We saw significant injection in
construction, but there is a time lag between
when something is implemented and when you
see the impact, that is why we did not see the
impact in the third quarter,” said Damilola
Akinbami, an analyst at Financial Derivatives
Co. in Lagos.
The slump in oil and shortages of foreign
currency and power could cause the economy
to shrink 1.7 percent this year, according to
the International Monetary Fund.
That would be Nigeria’s first full-year
contraction since 1991, according to data
from the IMF.
Federal Government and other policy makers
have assured Nigerians that the worst of the
recession was over.
Governor of the Central Bank of Nigeria, CBN,
Mr. Godwin Emefiele, in October, assured the
public that the economic recession would
soon be over, given the strategic measures
being put in place by the monetary and fiscal
authorities to turn the economy around.
Speaking in Lagos during an interactive
session with journalists, Emefiele emphatically
stated that the “worst is over”, adding that the
Nigerian economy was already on the path of
recovery.
The governor equally reiterated his call for the
Federal Government to partially sell some of
its oil joint venture assets, saying the
proceeds raised from the sale would go a long
way in boosting Nigeria’s foreign reserves and
reflating the economy through infrastructure
projects.
Emefiele also expressed optimism that the
liberalisation of the foreign exchange (FX)
market was starting to pay off, revealing that
the country had recorded $1 billion capital.
The Senate, two weeks ago, rejected the
government’s spending plan for the next three
years because the proposals, which were
meant to boost the economy, lacked details.
Lawmakers also rejected President
Muhammadu Buhari’s plan to borrow $30
billion abroad through 2018 on the same
grounds.
NBS report said: “In the third quarter of 2016,
the nation’s Gross Domestic Product (GDP)
contracted by -2.24 per cent (year-on-year) in
real terms. This was lower by 0.18 per cent
points from growth recorded in the preceding
quarter and also lower by 5.08 per cent points
from growth recorded in the corresponding
quarter of 2015. Quarter on quarter
(unadjusted for seasonality), real GDP
increased by 8.99 per cent
“During the quarter, aggregate GDP stood at
N26.55895283 trillion (in nominal terms) at
basic prices, compared to the third quarter
2015 value of N24.31363694 trillion. Nominal
GDP grew by 9.23 per cent. This growth was
higher relative to growth recorded in the third
quarter of 2015 by 3.22 per cent points. The
Nigerian economy can be more clearly
understood according to the oil and non-oil
sector classifications.”
The report said: “During the period under
review, oil production according to NNPC,
averaged at 1.63 million barrels per day
(mbpd), lower from production in second
quarter of 2016. Oil production was also lower
relative to the corresponding quarter in 2015
by 0.54 million barrels per day when output
was recorded at 2.17mbpd.
“As a result, real growth of the oil sector
slowed by –22.01 per cent (year-on-year) in
third quarter of 2016. This represents a
decline relative to growth recorded in same
quarter of 2015 at 1.06 per cent. Growth
declined by 23.07 per cent points and 4.54
per cent relative to growth in third quarter of
2015 and second quarter of 2016 respectively.
Quarter-on-Quarter, growth was 8.07 per cent.
As a share of the economy, the Oil sector
contributed 8.19 per cent of total real GDP,
down from figures recorded in the
corresponding period of 2015 and the
preceding quarter of 2016 recorded at 10.27%
and 8.26% respectively.
“Growth in the Non-oil sector was largely
driven by the activities of Agriculture (Crop
Production), Information & Communication
and Other Services.”

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