Fresh Economic Recession Looms In Nigeria

There is a possibility that Nigeria just like South Africa could return to economic recession following a negative growth in the local economy.

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The Nigerian economy will require more deliberate policy measures and engagements than the current responses in order to avert another recession, experts at the First Securities Discount House Limited (FSDH) have warned.

In an interview with journalists last weekend, the Head of Research, Ayodele Akinwunmi, noted that the real Gross Domestic Product (GDP) growth rate of 1.50% recorded in Q2 2018 was below the expectations of most analysts.

Akinwunmi said: “The current low GDP growth rate is not strong enough to stimulate credit creation. It has also increased the risk of doing business in Nigeria. Therefore, urgent measures are required so that low GDP growth rate does not become a new norm in Nigeria.”

Agriculture, which is the largest sector of the Nigerian economy at 22.86%, recorded a marginal growth of only 1.19%.

FSDH Research notes that the slow growth in the agriculture sector, if not checked, may lead to food shortage in the country and consequently escalating food prices and rising inflation rate.

Trade, which is the second largest sector of the Nigerian economy, contracted by 2.14% and also entered a recession in Q2 2018.

“The weak purchasing power in the country is responsible for the contraction in the Trade sector.

Improvement in the business environment that can lead to job creation and payment of salaries of workers, particularly among the state civil servants, will stimulate purchasing power,” he said.

FSDH Research observes strong growth in the information and communication and construction sectors of the economy.

The shortfall in crude oil production is weighing down on the external reserves from the full benefits of the favourable crude oil prices in the international market.