The Nigerian economy has suffered its second recession since 2016 due to contraction of gross domestic product in second consecutive quarter.
According to the National Bureau of Statistics, the nation’s GDP recorded a negative growth of 3.62% in the third quarter of 2020. It is recalled that the country had earlier recorded a contraction of 6.2% in the second quarter.
It is the nation’s second recession since 2016, and the worst economic decline in almost four decades.
Over the course of the year, the nation’s economic sector has been troubled by the coronavirus pandemic, which gave way to a huge reduction in oil revenues as global economic activities suffered for months.
The income generated from the nation’s crude oil accounts for nearly 90% of it’s foreign exchange earnings but less than 10% to its GDP. However, it only accounted for 8.73% of the economy in latest reports.
Statistics from Bloomberg shows that oil production fell to 1.67 million barrels a day from 1.81 million barrels in the previous quarter. The lowest since the last economic recession.
The World Bank earlier forecasted that the Nigerian economy will contract by 3.2% in 2020, assuming the spread of COVID-19 is contained by the third quarter. However, The International Monetary Fund forecasted a 4.3% decline.
Before the pandemic and its attendant disruption, the Nigerian economy was expected to grow by 2.1% in 2020 but the pandemic as well as border closure have seen the country record sustained inflation for more than two years, with the October figures rounding up to 14.25% – the highest in nearly three years.
The Central Bank of Nigeria in September cut interest rates to 11.5% to help salvage the economy and increase borrowing. It was the second reduction in months.
The latest development is likely to trigger a further cut of the policy rate. The monetary policy committee, which sets the rate, is to begin its two-day meeting on Monday.