The Nigeria Employer’s Consultative Association (NECA) has called for urgent economic recovery effort in view of the negative Gross Domestic Product (GDP) data released at the weekend by the National Bureau Statistics (NBS), which confirmed that the country has entered another recession.
NECA said the Federal Government should increase aggregate demand in the economy as a way to spark economic activities just it also called for more tax cut to promote business capital investment while encouraging local and foreign investment.
In addition to the pump prime measures, government should fast track the implementation of policies to diversify further its export potentials, mostly the huge stock of natural and agro- resources in order to reduce pressure on the foreign reserves.
The latest contraction in GDP, as revealed by NBS report, indicated the second recession in the country in the past five years, and it should be recalled that the Nigerian economy entered recession in Q2 2020 when GDP contracted by -2.06 per cent for the second time in the year.
Nigeria’s GDP in real terms declined by -3.62 per cent (year-on-year) in Q3 2020, thereby marking a full-blown recession and second consecutive contraction from -6.10 per cent recorded in the previous quarter (Q2 2020).
According to the NBS report, 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.
In Q3 2020, the oil sector contracted by –13.89 per cent (year-on-year), indicating a sharp contraction of –20.38 per cent points relative to the rate recorded in the corresponding quarter of 2019. Furthermore, oil sector decreased by –7.26 per cent points when compared with growth recorded in Q2 2020 (6.63 per cent).
The sector, which is the mainstay of the Nigeria’s economy, contributed 8.73 per cent to total real GDP in Q3 2020, down from 9.77 per cent and 8.93 per cent respectively recorded in the corresponding period of 2019 and the preceding quarter, Q2 2020.
The average daily oil production recorded in the third quarter of 2020 stood at 1.67 million barrels per day (mbpd), or 0.37mbpd lower than the average production recorded in the same quarter of 2019 and 0.14mbpd lower than production volume recorded in the second quarter of 2020 (1.81mbpd)
The Nigeria’s non-oil sector contracted for the second time as the economy continues to reflect the impacts of Covid’19 pandemic. In Q3 2020, the non-oil sector grew by –2.51 per cent in real terms during the reference quarter, which is –4.36 per cent points lower than the rate recorded in Q3 2019 but 3.54 per cent points higher than in the second quarter of 2020.
Speaking to the press in Lagos at the weekend, the Director General of NECA, Timothy Olawale stated that “the report of the National Bureau of Statistics (NBS), showed the country’s GDP growth declines by 3.62 per cent in Q3, 2020 after an earlier contraction of 6.1 per cent in Q2.
In summary, the GDP for Q1 to Q3 of 2020 stood at -2.48 per cent. The Oil GDP fell by -13.89 per cent from -6.63 per cent , in Q2 2020 and Non-Oil fell by -2.51 per cent from -6.05 per cent in Q2 2020. With negative GDP growth in two consecutive quarters, the economy has invariably entered into recession.”
Speaking further, Olawale noted that “the cumulative effects of the pandemic, Covid-19, which almost caused a global economic meltdown with serious impact for the Nigerian economy and the attendant lockdown could be said to have contributed to the negative contractions.
It is, however evident that with the high level of inflation and unemployment rate, reducing exchange rate of the Naira and other macroeconomic indices, there is need for urgent reevaluation and reassessment of Government’s economic policies.”
While proffering a way out of the impending economic quagmire, the NECA boss urged that there is urgent need to increase aggregate demand in the economy as a way to spark economic activities.
Government, he said, should give more tax cut to promote business capital investment while encouraging local and foreign investment.
“Government should fast track the implementation of policies to diversify further its export potentials, mostly the huge stock of natural and agro resources in order to reduce pressure on the foreign reserves.
We call for more robust and comprehensive expansionary fiscal and monetary policy packages to expeditiously reflate the economy out of the current crisis,” he concluded.