Nigeria heading toward recession in Q3, says Akabueze
It is official, Nigeria is heading toward its second recession in three years by the end of the third quarter of this year, says the director-general of the budget office, citing the impact of low oil prices and the coronavirus pandemic on Africa’s largest economy.
Ben Akabueze told reporters in Abuja on Thursday that it was expected that growth in the third quarter would be negative and the country might fall into recession.
A country is seen to have fallen into recession if it experience a negative economic growth for two consecutive quarters.
Nigeria’s Gross Domestic Product (GDP) declined 6.1 percent in the second quarter of the year, its first decline in since 2017 when it get out of recession and the government is projecting that the economy will record another negative growth rate by the third quarter will which will technically push the country into recession.
Nigeria. Africa’s top oil producer faces its worst economic crisis in four decades in the wake of an oil price war between Russia and Saudi Arabia at the start of the year, and the pandemic, which hurt demand for its main export commodity which provides 90 percent of foreign exchange earnings.
It would be the second quarter of negative growth after the economy contracted by 6.1 in the second quarter of the year.
Nigeria’s economy was last in recession in 2016, its first in 25 years, since when growth has been sluggish.
The International Monetary Fund has said it sees Nigeria’s GDP falling 5.4 percent this year, and the government has said the economy may shrink by as much as 8.9 percent.
The Central Bank of Nigeria (CBN) has been rationing dollars in recent months to the essential sectors of the economy in a bid to conserve reserves after it moved to unify its multiple exchange rates this month to qualify for a $1.5 billion World Bank loan, which is yet to be approved.
But dollar shortages have worsened afterwards with reserves now down 11.5 percent from a year ago. The bank has now turned its spotlight on exporters to curb dollar leakages.