Economic recession has worsened as the country’s Gross Domestic Product (GDP) contracted 2.24 percent in the third quarter from the -2.06 recorded in the second quarter of this year.
This is the third consecutive quarter that the Nigerian economy slumped with massive job cuts across different sectors as oil revenues and foreign direct investments declined.
The GDP report released yesterday the National Bureau of Statistics (NBS) showed that the latest rate is lower 0.18 percent points from growth recorded in the preceding quarter and also lower 5.08 percent points from growth recorded in the corresponding quarter of 2015.
The latest slump in the economy has exceeded the International Monetary Fund’s forecast that Nigeria’s economy would contract 1.7 percent in 2016.
A professor of Financial Economics at the University of Uyo, Professor Leo Ukpong, while analysing the report for the Daily Trust, said it is an indication that recession would still linger for awhile.
“Since this is November, most businesses may manage to keep people on payroll beyond December to help them humanistically,” Ukpong said on the implication of the sustained slump in the economy. “This means, not good Christmas for many Nigerian.”
The NBS showed that aggregate GDP stood at N26.56 trillion at the third quarter as against the N24.31 trillion recorded at the corresponding quarter of 2015.
Daily Trust’s analysis of the report showed that oil production during the third quarter averaged at 1.63 million barrels per day (mbpd), lower from production in second quarter of 2016 and also lower relative to the corresponding quarter in 2015 0.54mbpd when output was recorded at 2.17mbpd.
Due to the decline in production, real growth of the oil sector slowed -22.01 percent in third quarter of 2016, down from -17.48 recorded at the preceeding quarter.
As a share of the economy, the Oil sector contributed 8.19 percent of total real GDP, down from figures recorded in the corresponding period of 2015 and the preceding quarter of 2016 recorded at 10.27 percent and 8.26 percent respectively.
On the other hand, the non-oil sector grew 0.03 percent in real terms in the third quarter of 2016, reversing the last two quarters of negative growth recorded in Q1 and Q2 2016.
The Non-Oil sector contributed 91.81 percent to the nation’s GDP, higher from the 91.74 percent recorded in the second quarter of 2016.
“Growth in the Non-oil sector was largely driven the activities of Agriculture (Crop Production), Information and Communication and Other Services,” the report stated.
Ukpong said though the report is a reflection of the bad state of the economy, there is an improvement from the non oil sector.
However, he said the growth in the non oil sector is driven agriculture, indicating that more people are losing their jobs and going into small scale agriculture.
The professor said agriculture alone cannot reverse the recession unless emphasis is placed on manufacturing and value addition on agricultural produce.
He projected further job losses in the economy, especially at the first quarter of 2016 as employers may not be able to keep them further on the payroll.
He recommended that the President’s economic team must come up with aggressive interventions and policies that will address the further dip at least at the short term.
“We are going to have more unemployment at the beginning of the year. More companies will lay off people. The currency, on the other hand, will surfer more because they won’t be able to support our purchases. The exchange rate is going to dip.” he said.