Isaac Anumihe, Abuja
The National Bureau of Statistics (NBS) has reported a -3.62 per cent slip in Nigeria’s Gross Domestic Product (GDP) for the Q3 of 2020, indicating that the Nigerian economy has slipped into a recession.
A professor of Capital Market in Nasarawa State University, Keffi, Uche Uwaleke, said that although Nigeria has plunged into recession, the Q3 real GDP number is better than the Q2 result which was –6.10 per cent.
According to NBS, cumulatively, the economy has contracted by -2.48 per cent. While this represents an improvement of 2.48 per cent points over the –6.10 per cent growth rate recorded in the preceding quarter (Q2 2020), it also indicates that two consecutive quarters of negative growth have been recorded in 2020.
‘Furthermore, growth in Q3 2020 was slower by 5.90 per cent points when compared to the third quarter of 2019 which recorded a real growth rate of 2.28 per cent year on year.
‘The performance of the economy in Q3 2020 reflected residual effects of the restrictions to movement and economic activity implemented across the country in early Q2 in response to the COVID-19 pandemic. As these restrictions were lifted, businesses re-opened and international travel and trading activities resumed. Some economic activities have returned to positive growth. A total of 18 economic activities recorded positive growth in Q3 2020, compared to 13 activities in Q2 2020.
‘During the quarter under review, aggregate GDP stood at N39,089,460.61 million in nominal terms. This performance was 3.39 per cent higher when compared to the third quarter of 2019 which recorded an aggregate of N37,806,924.41 million. This rate was, however, lower relative to growth recorded in the third quarter of 2019 by –9.91 per cent points but higher than the proceeding quarter by 6.19 per cent points. For clarity, the Nigerian economy has been broadly classified into the oil and non-oil sectors,’ the NBS said.
Reacting to the negative growth, Uwaleke said that even though Nigeria has plunged into a recession with another negative growth in the Q3 GDP, the latest result was better than the Q2 result.
‘The NBS Q3 real GDP number is a confirmation of the fact that in terms of economic contraction occasioned by COVID’19, Q2 2020 represents the worst experience for Nigeria.
‘Compared to a contraction of -6.10% in Q2 of this year, it is actually an improvement reflective of the ease in lockdowns and movement restrictions, the reduction in the cases of COVID’19 and the gradual return of investor confidence in the economy.
‘This improved confidence has also manifested in PMI readings and stock market performance.
‘This explains why, although still in the negative territory, sectors like manufacturing, trade, transportation and education recorded improvements over the Q2 numbers.
‘However, the performance of the agriculture sector in real terms which came in at 1.39 per cent was disappointing. This corroborates the high food inflation rate now above 17 per cent caused in large part by insecurity in many parts of the country.
‘Yes, the economy has officially entered a recession but I see a quick V-shaped recovery as the effect of COVID’19 recedes and the impact of the interventions by the government and CBN begin to manifest including the implementation of the Economic Sustainability Plan.
‘The early passage of the 2021 appropriation Bill will also go a long way in supporting economic recovery,’ he said