Nigeria plunges into recession as COVID-19, oil prices bite

Nigeria plunges into recession as COVID-19, oil prices bite

Nigeria has slipped into a recession after its gross domestic product contracted for the second consecutive quarter, according to official data released.

Africa’s biggest economy is in recession in less than five years with the 2016 recession four years ago, being its first in a generation, and the country emerged from it the following year, 2017.

However, the growth of the Africa’s biggest economy has been fragile and this was further worsened by COVID-19 pandemic that disrupted both local and global economy amid low oil prices.

The continent’s top oil producer and exporter relies on crude sales for 90 percent of foreign exchange earnings.

Nigeria normally accounts for an average output of two million barrels per day. But the effects of the pandemic and low oil prices have cut production to approximately 1.4 million barrels.

“Q3 2020 Real GDP contracted for second consecutive quarter by -3.62 percent,” Yemi Kale, the statistician general, said on Twitter on Saturday.

“Cumulative GDP for the first nine months of 2020 therefore stood at -2.48 percent,” he added

The Oil challenge

The oil sector contracted by 13.89 per cent in the third quarter against growth of 6.49 per cent in the same period a year earlier, according to available data, while non-oil sectors shrank by 2.51 per cent in the three months to September.

Following Nigeria’s first confirmed COVID-19 case in late February, lockdowns were imposed from late March until early May in the main cities – economic hub, Lagos Ogun States and the capital, Abuja.

Lockdowns were also imposed in some of the country’s other states and a ban was placed on interstate travel.

“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 statistics office said in a report published on Saturday.

“As these restrictions were lifted, businesses reopened and international travel and trading activities resumed, some economic activities have returned to positive growth,” it said.

The government had previously said it expected the economy to contract by as much as 8.9 per cent this year in a worst-case scenario without stimulus.

In a similar development, the International Monetary Fund (IMF) has forecast a 5.4 per cent drop in Nigeria’s GDP this year.