Negative Q2 GDP growth was expected, say experts

• As Minister lauds ICT contribution 

Economic experts said they were not surprised by Nigeria’s gross domestic product (GDP) report, released Monday, by the country’s official data agency – the National Bureau of Statistics (NBS), which reported that Nigeria posted a negative growth of -6.1 per cent. 

The experts said it was expected because of realities on ground, leading to the outcome. One of the experts, Prof. Uche Uwaleke, finance and capital market Professor at the Nasarawa State University, Keffi, said: “It even appears to be in line with global expectations, as we have seen similar trends recently in countries like the UK and Japan.”

Uwaleke continued: “I am also not surprised about the huge size of the contraction put at -6.10%. As a matter of fact, because it is based on year-on-year, when one considers the 2.12% positive real GDP growth this same period last year, the decline in GDP comes to as high as 8.22%.

“It is easy to see why this happened. The negative impact of COVID-19 on health, which resulted in lockdowns and supply chain disruptions, the collapse in crude oil prices, and reduction in output in compliance with OPEC + agreement, the illiquidity in the forex market, and the lingering insecurity in the country, which affected agriculture output are to blame.

“This explains why the agriculture sector managed to eke out a growth rate of 1.58%, and manufacturing, trade and so many other sectors recorded negative growth. The lockdown and movement restrictions really affected the accommodation and food services sector, which declined by as much as 40%. I think this is going to be the worst this year.”

Despite the gloomy picture, the Minister of Communication and Digital Economy, Isa Ali Pantami, described the ICT sector contribution of 17.83% to the total real GDP in Q2, as unprecedented, about 20.54% higher than its contribution a year earlier, and above Q1 level of 14.07%.

A statement signed by his Technical Assistant (Information Technology), Dr Femi Adeluyi, quoted the Minister as saying that the growing contribution of the ICT sector to the GDP is a direct result of the focused and committed effort of the administration of President Muhammadu Buhari.

He identified strategic policy directions of the Federal Government such as the inclusion of Digital Economy in the mandate of the Ministry, the unveiling and implementation of the National Digital Economy Policy and Strategy, and the National Broadband Plan, among others.

Pantami observed that the GDP Report has shown how critical the ICT sector is to the growth of Nigeria’s digital economy and, by extension, the general economy, and called on all sectors to take advantage of the Federal Government’s new focus on the digital economy to enable and improve their processes through the use of ICT to enhance the output of all the sectors and boost Nigeria’s GDP.

But Uwaleke opined that the worst may not yet be over as a negative real GDP growth is also most likely to be recorded in Q3 2020. “But the size will be smaller as the economy gets restarted and crude oil price gradually picks up,” he projected. 
He therefore advised that to ensure the impact of the economic headwinds are moderated, it is important to increase the size of the various interventions by the government and the CBN, and ensure they are well-targeted and implemented.

Another Economist, Prof. Olu Ajakaiye, the Executive Chairman, African Centre for Shared Development Capacity Building (ACSDCB), Ibadan, and a former Director-General, Nigerian Institute of Social and Economic Research (NISER), had, last week, predicted that it would be a miracle if Nigeria was not already in recession, as the Q2 and Q3 indicators were already in negative growth territories. 

“I will be very surprise if we have not entered recession already now in  the third  quarter, because as an oil-dependent nation, once prices dipped by more than 60 per cent, it meant a lot of negative impact for us in many aspects, because we are also an import-dependent nation. That fact alone means poor access to foreign exchange for even imports. That was why the Petroleum Price Regulatory Agency (PPPRA), quickly adjusted the pump price template to align with import cost,” he confided in The Guardian in an exclusive chat.