Nigeria in recession as wrong approach & low oil prices shrink economy

Follow 9News Nigeria On Social Media

Refinery
Construction workers are seen working on a site during a facility tour at the proposed Dangote oil refinery site near Akodo beach in the outskirt of Nigeria's commercial capital Lagos June 25, 2016. REUTERS/Akintunde Akinleye
Social sharing

By Chijioke Ohuocha and Alexis Akwagyiram

LAGOS (Reuters) – Nigeria, Africa’s biggest economy, officially slid into recession for the first time in more than 20 years as the statistics office announced a further contraction in the second quarter of the year.

The Nigerian Bureau of Statistics (NBS) said on Wednesday that gross domestic product (GDP) contracted by 2.06 percent after shrinking 0.36 in the first quarter.

It said the non-oil sector declined due to a weaker currency, while lower prices dragged the oil sector down.

A slump in crude prices, Nigeria’s mainstay, has hammered public finances and the naira currency, causing chronic dollar shortages. Crude sales account for around 70 percent of government revenues.

Compounding the impact of low oil prices, attacks by militants on oil and gas facilities in the southern Niger Delta hub since the start of the year has cut crude production by about 700,000 barrels per day (bpd) to 1.56 million bpd. The government’s 2016 budget assumed 2.2 million bpd.

On Wednesday, the statistics office said annual inflation reached 17.1 percent in July from 16.5 percent in June – a more than 10-year high – and food inflation rose to 15.8 percent from 15.3.

Nigeria’s sovereign dollar bonds fell across the curve to their lowest value in more than two weeks after the NBS released its data.

READ ALSO  Official Document Finally Exposes 54 Persons Behind IPOB Activities In Nigeria And 22 Other Countries (See Full List)

“The Nigerian economy contracted more deeply than we had expected in the second quarter,” said Razia Khan, chief economist, Africa at Standard Chartered bank.

“With a wider current account deficit it remains important for Nigeria to maintain a credible policy response, in order to attract much-needed stabilizing inflows,” she added.

The NBS figures showed Nigeria attracted just $647.1 million of capital in the second quarter, a 76 percent fall year-on-year and 9 percent down from the first quarter.

Nigeria’s economy was last in recession, for less than a year, in 1991, NBS data shows. It also experienced a prolonged recession from 1982 until 1984.

President Muhammadu Buhari was in power for some of that period as a military ruler after seizing power in a December 1983 coup and remained head of state until the military pushed him out in August 1985.

The office of the vice president, who oversees economic policy, said in a statement it expected a “better economic outlook” for the second half of 2016 “because many of the challenges faced in the first half either no longer exist or have eased”.

Niger Delta Avengers, the group claiming responsibility for most of the attacks in the oil-producing region in the last few months, said on Monday it had ceased hostilities.

READ ALSO  Check Out Ten States In Nigeria That Borrowed From The CBN To Pay Salaries

Adeyemi Dipeolu, a presidential economic advisor, attributed the recession largely to a “sharp contraction in the oil sector” caused by the militant attacks.

“The rest of the second quarter data is beginning to tell a different story. There was growth in the agricultural and solid minerals sectors,” he added.

The naira remained at the record low of 418 per dollar hit on Tuesday on the black market, as dollar shortages curb activity on the official interbank market where the currency was offered as rates as weak as 365.25 this month before gaining ground after central bank interventions.

(Additional reporting by Felix Onuah in Abuja; Editing by Toby Chopra/Ruth Pitchford)

 

Leave your comment on this post

THE ROTTEN FISH: CAN OF WORMS OPENED OF APC & TINUBU'S GOVERNMENT OVER NIGERIA'S ECONOMIC DOWNTURN

WATCH THE CRITICAL ANALYSIS AND KNOW THE RESPONSIBLE PARTIES TO BLAME FOR NIGERIA'S ECONOMIC CHALLENGES, WHILE CITIZENS ENDURE SEVERE HARDSHIPS.

Watch this episode of ISSUES IN THE NEWS on 9News Nigeria featuring Peter Obi's Special Adviser, Dr Katch Ononuju, 9News Nigeria Publisher, Obinna Ejianya and Tinubu Support Group Leader, McHezekiah Eherechi

The economic crisis and hardship in Nigeria are parts of the discussion.


Watch, leave your comments, and share to create more awareness on this issue.

READ ALSO  Earning ₦200K Monthly In Nigeria Is Better Than £2000 In UK - Allen Onyema

#9NewsNigeria #Nigeria #issuesInTheNews #politics #tinubu THE ROTTEN FISH: CAN OF WORMS OPENED ...
DON'T FORGET TO SUBSCRIBE AND LEAVE YOUR COMMENTS FOR SUBSEQUENT UPDATES
#9newsnigeria #economia #economy #nigeria #government @9newsng
www.9newsng.com

Leave your comment

Click on the link below or Scan the QR Code to join the 9News Nigeria WhatsApp Channel

9News Nigeria Investigative Reports WhatsApp Channel
9News Nigeria Investigative Reports WhatsApp Channel
About 9News Nigeria 13308 Articles
9News Nigeria is Nigeria's favourite news source. For Authentic, Unbiased News on Politics, Business, Sports, Technology, Entertainment and Lifestyles, Health, Nollywood, Crime and Investigations, Family and Relationships, Inspirations .. and much more. For Latest News from Africa and around the world, 9News Nigeria is your best source. WhatsApp +2348115805632 Email: info@9newsng.com Facebook: www.facebook.com/9NewsNG | Twitter/Instagram: @9newsng

Be the first to comment

Leave your comment