Nation back to 25-year economic low, inflation hits 17.1 per cent
• Naira falls to N420 at parallel market
From mooted talks to official confirmation yesterday, Nigeria has slipped into recession, already described as lowest economic performance in about 25 years.
But more worrisome is that the depth of the recession at -2.06 per cent, is more than the expected growth for the entire year at 1.8 per cent, as projected by the International Monetary Fund (IMF).
The decline was dipped by 1.70 per cent points from the negative growth rate of –0.36 per cent recorded in the first quarter, and also lower by 4.41 per cent points from the growth rate of 2.35 per cent recorded in the corresponding quarter of 2015.
This figure means that the economy is now 2.06 per cent below the base level and would need a quantum leap in growth to average the projected growth of 1.8 per cent at the end of the year.
Compounding the challenge also is the increase in inflation at 17.1 per cent, extending the negative rate to -3.1 per cent against the benchmark interest rate at 14 per cent.
The implication is that it is now a disincentive for investors, especially the foreign ones, in the search for foreign investments to boost national reserves and foreign exchange scarcity.
The National Bureau of Statistics (NBS), while releasing the figures yesterday, said the impact of low oil prices brought the economy to this low level.
It also noted that the attacks by militants on oil and gas facilities compounded the situation, which cast more doubts on the economy’s quick return, as the end of hostilities remains unclear.
While the Presidency is optimistic on the rebound of the economy from third quarter as “many of the challenges faced in the first half either no longer exist or have eased,” the business community are afraid that the depth of the recession will impair efforts.
Frontline economist and Chief Executive Officer of Financial Derivates Limited, Bismarck Rewane, said though the official report just came out, it was long known that the country was in recession.
“We now have our work cut out for us. We need investor’s confidence now more than anytime else and all hands must be on deck. We must woo the investors now, but it is not a magic wand. We must first do our work.
“The challenge is that the recession was more deeper than we thought and that requires more coordination, especially from government and the Central Bank of Nigeria.”
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