The Nigerian economy has declined by -6.10 percent in the second quarter of 2020, indicating significant negative growth.
It is the worst in the last 10 years since 2010 as comparative analysis has shown. The Gross Domestic Product (GDP) for the second quarter of 2020 released on Monday by the National Bureau of Statistics (NBS) showed that the latest GDP contraction ended the 3-year trend of low but positive real growth rates recorded since the 2016/2017 recession.
The NBS largely attributed the economic contraction 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
COVID-19 pandemic have economic consequences for many countries. In Nigeria, the country’s lockdowns froze economic activities, causing job losses and supply chain disruptions. And its dependence on oil for revenue and foreign exchange has made it particularly vulnerable to the unprecedented oil price crash triggered by a collapse in demand.
And before the pandemic, the Nigerian government had been grappling with weak recovery from the 2014 oil price shock, with GDP growth tapering around 2.3 percent in 2019. In February, the IMF revised the 2020 GDP growth rate from 2.5 percent to 2 percent, as a result of relatively low oil prices and limited fiscal space.
Some forecasts suggest that Nigeria’s unemployment rate could rise to 33.6% (or 39.4 million people) by the end of the year if urgent steps are not taken. At the end of 2018, it stood at 23.1% (or 20.9m people). In addition, a recently released National Bureau of Statistics household survey showed that over 40% of Nigerian households could be classified as poor. It projected that the economy could shrink by anything from 4.40% to 8.91%. This would depend on the length of the lockdown period, the potency of economic plans that are put in place, and, in particular, the amount of stimulus spending.
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The pandemic is expected to plunge most countries into recession in 2020, with per capita income contracting in the largest fraction of countries globally since 1870. Advanced economies are projected to shrink 7 percent. That weakness will spill over to the outlook for emerging market and developing economies, who are forecast to contract by 2.5 percent as they cope with their own domestic outbreaks of the virus. This would represent the weakest showing by this group of economies in at least sixty years.
As Nigeria is experiencing her fair share of the economic impacts of the Covid-19, every other region is subject to substantial growth downgrades. East Asia and the Pacific will grow by a scant 0.5%. South Asia will contract by 2.7%, Sub-Saharan Africa by 2.8%, Middle East, and North Africa by 4.2%, Europe and Central Asia by 4.7%, and Latin America by 7.2%. These downturns are expected to reverse years of progress toward development goals and tip tens of millions of people back into extreme poverty.
However, emerging market and developing economies will be buffeted by economic headwinds from multiple quarters: pressure on weak health care systems, loss of trade and tourism, dwindling remittances, subdued capital flows, and tight financial conditions amid mounting debt. Exporters of energy or industrial commodities will be particularly hard hit. The pandemic and efforts to contain it have triggered an unprecedented collapse in oil demand and a crash in oil prices. Demand for metals and transport-related commodities such as rubber and platinum used for vehicle parts has also tumbled. While agriculture markets are well supplied globally, trade restrictions and supply chain disruptions could yet raise food security issues in some places.
This crisis highlights the need for urgent action to cushion the pandemic’s health and economic consequences, protect vulnerable populations, and set the stage for a lasting recovery. For emerging market and developing countries, many of which face daunting vulnerabilities, it is critical to strengthen public health systems, address the challenges posed by informality, and implement reforms that will support strong and sustainable growth once the health crisis abates.
As critical as the impacts of Covid-19 is on all sectors of the world economy, there is a need for the media and the communication experts to inculcate high level of professionalism in their reportage on economic-based issues to address unnecessary tensions regarding government’s policies and programmes geared towards interventions and economic recovery and bear in mind that the present economic crisis experience is not only felt by Nigeria but a global crisis, even the great Britain is facing economic recession and other developed countries so, Nigeria will not be an exception in the world Pandemic period of COVID19. Professionalism is Key in whatever news you are spreading to the world.
The Federal Government in her efforts to avert a drastic decline in economic growth, the government announced a stimulus package as part of its post-COVID-19 economic sustainability plan. It has promised a stimulus spending package of N2.3 trillion (about $5.9 billion) with the aim of keeping economic contraction to minus 0.59%. This is a good start and must be encouraged.
By Dr. Tom Ohikere
