By Our Reporters
Although the National Bureau of Statistics (NBS) news release yesterday declaring Nigeria’s economy free from recession was received with so much excitement, economic experts have, howVever, warned that the 0.55 per cent (GDP) growth in terms in the second quarter of 2017 does not call for celebrations. They described it as a fragile growth which if not handled with caution could reverse or relapse.
According to the nation’s GDP report released by NBS on Monday, the economy recorded the positive growth after five consecutive quarters of contractions since Q1, 2016.
The 0.55 per cent growth was 2.04 per cent higher than the rate recorded in the corresponding quarter of 2016 where a contraction of -1.49 per cent was reported. This shows that quarter-on-quarter, real GDP growth was 3.23 per cent.
The oil sector was estimated to have averaged at 1.84 million barrels per day, which is 0.15 million barrels higher than the daily average production recorded in the first quarter of June.
The non-oil sector, which was driven by agriculture, finance and insurance, electricity, gas, steam and airconditioning supply and other services grew by 0.45 per cent in real terms.
This was 0.83 per cent higher than the rate recorded in second quarter 2016 and -0.28 per cent lower than the rate reported in first quarter of 2017.
Statistician General of the Federation, Dr Yemi Kale had earlier told Bloomberg in an interview that there was a likelihood that the economy exited recession in June 2017, but that he was not sure because all the numbers had not been collated.
“Intuitively, we might be getting out of recession in the second quarter but I can’t say until all the numbers are in.”
“If it doesn’t happen in the second quarter, it will be a much reduced negative and it will definitely happen in the third quarter, unless we have a new round of shocks in the later weeks,” he said.
But reacting to news of the country exit from recession on Tuesday, some analysts who spoke to Daily Sun, said that although the outlook for more growth looks positive, there was need for all stakeholders to exercise caution.
According to Bismark Rewane, the Managing Director of Lagos-based Financial Derivatives Company, the prospects for more robust growth are bright; “You can see that there have been improved performances in non-oil sectors in the second quarter. The prospects for more robust growth are bright. I hope the current economic diversification efforts, which is seeing more attention being given to agriculture and mining, will be sustained,” he said.
He also expressed optimism that the nation’s economy would further be buoyed, if ongoing truce with Niger Delta militants is intensified.
“If there are no attacks on oil facilities and production is increased and Nigeria earns more money, then the economy will stabilise,” Rewane said.
Nigeria’s oil output has ramped up to an average of two million barrels per day from a low of 1.3 million in 2016 following government’s peace talks with Niger Delta militants.
In the same vein, other economists have also sounded cautious about the rebound, saying Nigeria still was not achieving its economic potential.
According to Razia Khan, the chief economist for Africa at Standard
Chartered, “this is not at all a robust GDP growth as it still falls far short of the growth rates the Nigerian economy should be achieving.”
But Dr. Oladimeji Alo, former Director General , Financial Institutions Training Centre (FITC), for his part sees it as good development.
For him, “it is good news. And it has psychological impact in the sense that it shows that the Federal Government’s efforts at revamping the economy is yielding fruits in redirecting the economy away from recession. But in terms of impacting the populace directly, it will take some time to reflect. But it is good news to know that we are now back on the path of growth.”
Meanwhile, the founder, Centre for Values and Leadership, Professor Pat Utomi, said the news from the NBS report that the country recorded positive growth in GDP was a good one, but stressed that much still needs to be done because the GDP growth was still far below our population growth rate.
He advised government to concentrate efforts at job creation to expand economic activities and spur growth in various sectors including agriculture and manufacturing, adding that policy choices must equally be in favour of those two critical sectors.
“For those that are conversant with the economy, those signs have been there that the country would exit recession soonest. But this is good news because the announcement will go a long way in calming frayed nerves, especially investors that rely on growth statistics to make investment decisions,’’ he said.
‘‘But largely I see a very good positive signal with policy implementation, especially with the creation of a team of energetic, smart and young Senior Special Assistants (SSAs) to work in co-coordinating policies to drive the economic recovery plan. And if there is enough political will, we should very soon begin to see signs of economic growth and recovery,’’ he stated.
The Director General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Emmanuel Cobham, said this was the expectation of an average Nigerian and the impetus of this current government to streamline things by sectorising the economy with the economic blueprint.
He added: “The performance of the economy has been coming up and it is becoming better at every point. Since it is becoming better, it is not strange news that Nigeria has come out of recession in this last quarter, which is a good thing we were looking on to.
“But the emphasis is that we should sustain interest in agriculture, then agricultural inputs and implements.
The Federal Government should make sure those things are being provided for, trained people from school and let them understand that there is beauty in going back to the farm.”
Among all the sectors of the economy, he said agriculture would be the major driver and it is the area which the government should concentrate on because agriculture is a sustainable thing if everybody is involved in it.
Reacting to the development, an economic analyst and Chief Executive Officer of Global Analytics Limited, Tope Fasua, said: “we should celebrate but we should not celebrate too much.
“We should not have even slipped into recession in the first place. We should be mindful of policy decisions that took us there.
But for a development economist and an economy analyst, Mr Odilim Enwegbara, Nigeria has not exited recession.
According to him, to exit recession is a process just like to slip into a recession is a process.
He, therefore wondered what indices Nigeria used to exit recession because an average man has not got a job and those working have not got their salaries.
“Let me tell you why I don’t agree in principle is because, to come out of recession, you need two consecutive growths in GDP, just the same way you have two consecutive negative growths to slip into recession.
“The same thing happens if you are going to exit recession. There are two types of growths the economy can witness—-vertical economic growth and horizontal economic growth in combination. When you have a vertical economic growth, the economy can be growing without trickling down, without real growth. If the growth is a vertical growth,it has a multiplier effect without a trickle-down effect. If it is a horizontal growth it is a more inclusive growth because we have both trickle-down and multiplier effect. So, I don’t know the type of growth we have. Let’s look at what has generated the growth. Is it improvement in power? Is it improvement in infrastructure? Is it improvement in manufacturing? Is it improvement in agriculture?. We have to actually segment the sectors to find out what has triggered the growth. Is it possible that we might have borrowed some money to inject into the economy so that we are witnessing a growth?. Is it inflation-driven growth? You have a growth but inflation can eat up the whole growth. So, these are the things we have never been told, but we are already celebrating that Nigeria has exited recession.
Recession is not an accident. It takes time to build up. It is like sickness. Cancer does not develop in a day. Cancer takes time to build up. Heart attack takes time to build up. So, we have agreed what caused the recession. So, we have not agreed what has stopped the recession. That is the problem. Is it real sector growth that has driven the economy or is it financial speculation that led to the growth? As at today, an average Nigerian has not got a job, has not got his or her salary. ”
Some Nigerians have also argued that until the dollar crashed against the naira and prices of electronics and furniture were reduced, we would not believe the NBS report because it was the recession that led to the high prices of goods and until the prices crash, we would not join in the celebration..
Meanwhile, President Muhammadu Buhari has welcomed the news of Nigeria’s exit from recession with cautious optimism, stressing that his administration will continue to drive the country’s economic growth by vigorously implementing the Economic Recovery and Growth Plan launched earlier this year.
Buhari who stated this in Daura, Katsina State, while receiving the President of Niger, Mahamadou Issoufou said the real impact of coming out of recession would be better felt when ordinary Nigerians experience a change in their living conditions.
He told journalists that he was “very happy’’ to hear that the country was finally out of recession, adding that the real gain should be improved conditions for Nigerians.
His words: “Certainly I should be happy for what it is worth. I am looking forward to ensuring that the ordinary Nigerian feels the impact.’’
The President then commended all the managers of the economy for their hard work and commitment, stressing that more work needed to be done to improve the growth rate.
“Until coming out of recession translates into meaningful improvement in peoples’ lives, our work cannot be said to be done”, he added.