Nigeria on the path of recovery, exits recession again

© Nigeria on the path of recovery, exits recession again
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Key indicators:- *GDP records 0.51% growth in Q1 *’Economy on gradual part of recovering’ *Non-oil sectors remain largest contributors *Agriculture sector grew by 2.28% In spite of the several challenges caused by low oil prices and the second wave of the Covid-19 pandemic, Nigeria’s economy is finally out of the woods and has exited recession as Gross Domestic Product (GDP) rose by 0.51 per cent in the first quarter (Q1) of 2021. The Nigerian economy had increased by 0.11 per cent in the last quarter of 2020, and with the nation’s slow but steady movement finally recorded another positive growth for the second consecutive quarter in the first quarter of 2021. The country slid into recession last year, after recording negative growth rates in the second and third quarter of 2020. Latest GDP report by the National Bureau of Statistics (NBS) on Sunday stated that the growth rate was slower than the positive 1.87% recorded in Q1 2020 but higher than 0.11 per cent recorded in Q4 2020. The Nigerian economy had grown 0.11 per cent in the fourth quarter of 2020, from the 6.11 per cent contraction in the third quarter. The continent’s largest economy fell into a recession after the Covid-19 pandemic hit its major sources of revenues. The country’s major source of export revenue which is crude oil sales crashed during the period to a record low. Speaking on this development, a finance expert, Prof. Uche Uwaleke, told our correspondent on Sunday evening that Nigeria’s economy is gradually on the path of recovery. According to him, the Q1 2021 GDP report reflects an economy already on the path of gradual economic recovery with a positive real GDP growth rate following that recorded in the previous quarter. “Although still weak at 0.51 per cent, it is interesting to note that the manufacturing sector is now out of the negative territory increasing from -1.51 per cent to 3.40 per cent. “Equally noteworthy is the moderation in the negative performance in sectors like Trade, Accommodation and Education.” Uwaleke added that the increase recorded in the Health sector from 3.05 per cent in Q4 of 2020 to 4.65 per cent clearly shows that the country is winning the war against the COVID’19 pandemic. He said it is clear that the improved performance in the oil sector relative to the previous quarter was largely on account of improvement in average crude oil production He however said the report also reveals a disturbing pattern in the real GDP growth rate. Declines were recorded in critical sectors of the economy such as Agriculture, ICT, Real Estate and Transportation. This may not be unconnected with the rising insecurity in the country. He, however, cautioned that the non-oil sector dropped should be of concern to both the fiscal and monetary authorities. Meanwhile, the breakdown of the report showed that real GDP base on quarter on quarter, grew at -13.93 per cent in Q1 2021 compared to Q4 2020, reflecting a generally slower pace of economic activities at the start of the year. “In the quarter under review, aggregate GDP stood at N40, 014,482.74 million in nominal terms. This performance is higher when compared to the first quarter of 2020 which recorded aggregate GDP of N35,647,406.08 million, indicating a year on year nominal growth rate of 12.25 per cent ” the report added. Further breakdown showed that oil GDP contracted, following the lacklustre performance in global demand, forcing the Organization of the Petroleum Exporting Countries and its allies, including Nigeria, to cut down on production output. “The oil sector recorded a real GDP growth rate of –2.21 per cent (year-on-year) in Q1 2021 indicating a decrease of –7.27% points relative to the growth rate recorded in the corresponding quarter of 2020 (5.06%). “In terms of contribution to aggregate GDP, the Oil sector accounted for 9.25 per cent of aggregate real GDP in Q1 2021, slightly lower than 9.5 per cent recorded in the corresponding period of 2020 but higher than in the preceding quarter, where it contributed 5.87 per cent.” The NBS explained that “In the first quarter of 2021, average daily oil production stood at 1.72 million barrels per day (mbpd), or 0.35mbpd lower than the average daily production of 2.07mbpd recorded in the same quarter of 2020 but higher than the production volume of 1.56mbpd recorded in the fourth quarter of 2020.” Meanwhile, the non-oil sector sustained the mild recovery, but lower than the records from Q4 2020. “The non-oil sector grew by 0.79 per cent in real terms in Q1 2021, which was –0.75 per cent points lower compared to the rate recorded in the same quarter of 2020 and -0.89 per cent points lower than rates recorded in the fourth quarter of 2020.” It stressed that growth in the sector was driven mainly by the Information and Communication (Telecommunication) sector, while other drivers include Agriculture (Crop Production); Manufacturing (Food, Beverage & Tobacco); Real Estate; Construction and Human Health & Social Services. “In real terms, the Non-oil sector accounted for 90.75% of aggregate GDP in the first quarter of 2021, higher than its share in the first quarter of 2020 which was 90.50% but lower than 94.13% recorded in the fourth quarter of 2020.” The report showed that Nigeria’s agricultural sector grew by 2.28% in real terms in Q1 2021 compared to a growth of 3.42% in Q4 2020 and 2.20% in Q1 2020. NBS added that Crop Production under Agric real GDP grew by 2.31% compared to 3.68% in Q4 2020 and 2.38% in Q1 2021. Livestock under Agric real GDP grew by 1.65% compared to 2.38% in Q4 2020 and 0.63% in Q1 2020. Fishing under Agric real GDP grew by 3.24 % compared to -3.60% in Q4 2020 and 1.49% in Q1 2020. The report disclosed that Forestry under Agric real GDP grew by 1.28% compared to 1.24% in Q4 2020 and 1.71% in Q1 2020. On the impact of the economic downturn on the aviation sector, the immediate past national secretary of the National Union of Air Transport Employees, Comrade Olayinka Abioye said, aside from the global pandemic which had impacted hugely on global economy and sundry issues, Nigeria’s economic indices have not really stabilized thus truncating as it were, growth and survival plans for government and individuals. According to Abioye, bearing the recession has therefore created so much crisis in the aviation industry leading to loss of employment, loss of and closure of businesses, huge indebtedness by airlines, other service providers and contractors who took loans from various financial institutions for one project or the other but unable to fulfil both obligations due to recession. He said it has crippled the government so much so that she had to be borrowing funds from all sources to funds projects, pay workers salaries and other sundry subjects. “You might also noticed that recession had created a vacuum of low patronage by tourists and regular travellers. However, various players have been devising means of stemming this tide by deploying techniques and technology to reduce the human factor in the workplace and or allow fewer workers access to their workplace while others work from home, thus savings funds/capital that could be deployed elsewhere. As there arose another ugly side to our daily transactions, insecurity on our roads has led or is leading people to stay at home this reducing risks of avoidable accidents or incidences of kidnappings and terrorism.” He stated that those who can afford air travels usually do try to fly but the industry is not yet stabilised to accommodate passengers and tourists who would be made to undergo health tests before they can fly. “Recessions result in higher unemployment, lower wages and incomes, and lost opportunities more generally. Education, private capital investments, and economic opportunity are all likely to suffer in the current downturn and the effects will be long-lived. He noted that the problems of recession have led to the less be production leading to real GDP and lower average incomes and unemployment, higher Government borrowing and devaluation of the exchange rate. Daily times
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