Nigeria’s economy has sunk into recession as the nation’s Gross Domestic Product (GDP) dropped to a record low of 2.06 per cent in the second quarter of 2016.

The recession is attributed to the persistently low oil price and disruptions in crude production as a result of attacks on oil facilities in the Niger Delta region.

Oil price has tumbled from more than $100 a barrel in 2014 to under $50 now while militancy in the Niger Delta has cut production from 2.4 million to 1.6 million barrels per day.

The nation’s GDP report for the second quarter released by the National Bureau of Statistics (NBS) yesterday showed that the GDP declined by -1.70 per cent points from the growth rate of –0.36 per cent recorded in the first quarter of 2016.

An analysis of the report showed that the 2.06 percent recorded in the second quarter of this year is also lower by 4.41 per cent points from the growth rate of 2.35 recorded in the corresponding quarter of 2015.
The NBS reported nominal GDP of N23.48 trillion at basic prices at the second quarter of 2016, up from N22.3 trillion recorded at the preceding quarter while real GDP was N16.1 trillion, also up from N15.9 trillion recorded at the first quarter of the year.

According to professor of Economics, and the Director General of the West African Institute for Financial and Economic Management in Lagos, Akpan Hogan Ekpo the quick way out of this type of recession is to inject money into the system.

He said the president has the option of borrowing locally or externally or pump the looted funds already recovered into the economy before the situation gets to depression.
Prof Ekpo, who is among the experts invited by the presidency recently to design the ways out said: “ The only way out is to reflate the economy by releasing money for both recurrent and capital projects and make necessary plan to help states pay the outstanding salaries of workers.”

He explained that this type of recession is too bad because the key sectors such as services and manufacturing are declining rapidly, therefore government must do all it can to provide the enabling environment such as fixing power and providing cheap loans to real sector.

He also urged the Central Bank of Nigeria to quickly adjust the Monetary Policy Rate otherwise known as the lending rate down ward for the manufacturers to access loans easier.

On the fiscal terms, Professor Ekpo said there should be no more increment of tax for the common man but government should tax the upper class by introducing luxury tax and discourage import of same products to conserve forex.

A lecturer at the Department of Economics of the Kaduna State University, Dr. Aminu Usman, said the latest report indicated that the economy has some structural deficiencies beyond the crash in the production and price of crude oil.

Dr. Usman told the Daily Trust that oil price crash should have aided Nigeria to adjust and redirect the economy on the path of growth but instead, the economy is further sliding into deeper crisis, indicating structural weaknesses requiring urgent measures to address beyond what the government is currently doing. On the skyrocketing inflation rate, Dr. Usman said the development is worrisome when looked at in conjunction with severe cash squeeze.

“Inflation has devalued people’s income and lives while unemployment and cash squeeze lowers purchasing power,” he said.

He explained that the closure of many companies has worsened the unemployment situation in the country.
Dr. Usman advised that that the government should come up with indigenous policies out of the ordinary to jump start the economy.

“One way to do that is to start paying local contractors and awarding new contracts for rural infrastructure in order to resuscitate rural economies to create market for farm products and manufactured goods. Paying foreign contractors only put pressure on for FX,” he said.
The Programme Coordinator of the Economic Governance of the Open Society Initiative for West Africa (OSIWA), Joseph Idahosa Amenaghawon, told Daily Trust that the GDP report had given credence to the fact that Nigeria is in recession.

“We are possibly bracing up for more delicate economic indicators that validate the recession we are faced with,” he said.

The Executive Director of the African Centre for Leadership, Strategy and Development, Dr. Otive Igbuzor, said the latest economic indicators confirmed that Nigeria was in recession and the economic downturn in the country was worsening.

“For me, there are two main things that have come out clearly from these reports. First is the confirmation that we are now in recession. Secondly, it shows that the economic situation is worsening with increasing inflation and increasing negative growth,” he said.
Igbuzor told Daily Trust that the economic situation of the country was worsening and it was not surprising as evidenced from daily experiences.

A further analysis of the report showed that the non-oil sector declined by 0.38 per cent in real terms in the Second Quarter of 2016, being 0.20 per cent points lower than the First Quarter of 2016 by -0.18percent, and 3.84 per cent points lower from the corresponding quarter in 2015 by 3.46 per cent.

In real terms, the non-oil sector contributed 91.74 per cent to the nation’s GDP, higher from the 89.71 per cent shares recorded in the first quarter of 2016.
Amenaghawon said the latest GDP report called for concern and action in the area of the proposed emergency economic powers the president may seek.
He said the National Assembly should look into and debate the emergency powers to fix the economy which the president was likely to seek in a bill.

“The proposed economic emergency powers, if it does see the light of day, may offer some quick turnaround options for the country,” he said.

Similarly, the NBS reported yesterday that the nation’s inflation rate rose to 17.1 per cent in July from 16.5 per cent recorded in June.

An analysis of the report showed that energy and energy-related prices, such as those of electricity, kerosene, solid fuels and lubricants for personal transport equipment continued to be the largest increases reflected in the core sub-index which increased in July by 16.9 per cent from the 16.2 per cent recorded in June.

The report also showed that the onset of the harvest season was yet to have a significant impact on food prices as the food sub-index increased by 15.8 per cent in July, 0.5 per cent points lower from rates recorded in June.

The NBS also reported yesterday that unemployment rate rose 19.9 per cent as recorded at the first quarter of this year to 20.5 per cent at the second quarter, bringing the total number of unemployed or underemployed persons in the country to 17.6 million as at the end of the second quarter of 2016.

Indicative of the worsening economy, the NBS also reported yesterday that the total value of capital imported into Nigeria in the second quarter of 2016 dropped by 75.73 per cent compared to the value recorded at the second quarter of 2015 to stand at $647.1 million.

Lalasticlala, Mynd44

Acidosis:
I've been changing TV channels since 4 A.M, headline news remain the same everywhere:

"Africa's most populous country slides into recession


Nigeria in recession has economy shrinks