Oil prices: NECA urges aggressive policy to sustain economic recovery

THE Nigeria Employers’
Consultative Association
(NECA), has urged fiscal
and monetary authorities to
develop more aggressive and
decisive policies to sustain
economic recovery in the
wake of falling oil prices.
Director-General of
NECA, Mr Timothy Olawale, who made the call on
Tuesday in Lagos said, “in
our analysis of the country’s
economy, we observed a
strong correlation between
global oil prices (brent) and
the country’s Gross Domestic
Product (GDP) between Q1
2014 and Q1 2020.
“This indicates that the
direction of growth is pretty
much determined by the
direction of oil prices, it can
be adduced that a dollar increase in global oil prices corresponds with average 0.1 per
cent rise in GDP growth.
“A similar trend was witnessed in Q2 2017, when the
country exited recession, it
was not buoyed by government policies, but by a rebound in oil prices.
“This calls for a more drastic management of the country’s economy from the global
shock of oil prices.”
Olawale noted that the
slowdown in the GDP
growth reflected the earliest
effects of the disruptions on
non-oil economy, coupled
with an escalating war of
words between the U.S. and
China which resulted to low
demand in global oil.
He said that the lockdown
of the country’s economy
commenced in April due to
the pandemic, and therefore,
the real impact of COVID-19
on the economy would be
felt in the Q2 GDP result.“We
anticipate contraction in the
second quarter, as the economy witnessed a six week’s
lockdown on the commercial
nerves of the country, and
similar trend witnessed in
global economy.”