Amidst the rising rate of corruption, a spike in COVID-19 pandemic, banditry, and kidnapping, the Federal Government, yesterday, declared that the Nigerian economy has finally exited the recession that hit the economy in the first quarter of 2021.
Minister of State Budget and Economic Planning, Mr. Clem Agba, who disclosed this in Imo State while commissioning a 3.5 kilometer Ring road executed by the Federal Ministry of Agriculture and Rural Development at Umucheke, Okwe in Onuimo Local Government Area of Imo State, attributed the recovery to the policies executed by the Federal Government during the period.
His declaration came as the National Bureau of Statistics (NBS) reported that Nigeria’s Gross Domestic Product (GDP) grew by 0.11 percent (year-on-year) in real terms in the fourth quarter of 2020, even with an average daily oil production of 1.56 million barrels per day (mbpd).
According to the NBS, the growth represents the first positive quarterly growth in the last three quarters, thus paving way for the country to exit an economic recession it fell into at the end of the first quarter of 2020 following the coronavirus pandemic outbreak.
But despite the economy’s weak recovery, experts believe the latest positive growth reflects the gradual return of economic activities following the easing of restrictions on local and international commercial activities in the preceding quarters.
“Growth in the sector was driven by information and communication (telecommunications & broadcasting) with the non-oil sector contributing 94.13 per cent to the nation’s GDP in the fourth quarter of 2020.
“But crude oil /natural gas was the main contributor to the sector with a weight of 86.79 per cent in Q4 2020 and 93.95 per cent for the annual contribution.”
Commenting on the latest GDP growth figures, Chief Executive Officer of Financial Derivatives Limited, Mr. Bismark Rewane, agreed with the NBS’s claim saying once a positive growth is recorded, a country can no longer be in recession no matter how marginal the increase.
He, however, advised the Federal Government to continue to do what it did in various sectors that contributed to the positive growth while supporting others that did not contribute much, and avoid policies that constrain growth.
Rewane expressed concern over the manufacturing sector’s contraction in the quarter under review while urging the government to make forex available to the real sector to enable them to engage in more production of goods and services to help the economy expand.
He added that but for the #EndSARS protests that affected all facets of the economy negatively in Q4 2020, the GDP growth of 0.11per cent could have been higher.
On its part, the Lagos Chamber believes output contraction recorded in the year 2020 further highlights the country’s weak macroeconomic fundamentals and the persistent, structural, policy, and regulatory issues in the economy. It said apart from declining growth, the economy is still confronted with several challenges, including rising consumer prices (inflation now at a 45-month high of 16.47 per cent in January 2021), weak employment level, persisting liquidity concerns in the foreign exchange market, high poverty incidence, weak investor confidence, and insecurity, among others.
These challenges which had been part of the country’s economic narrative prior to the pandemic were amplified by the COVID-19 induced disruptions.
“We note the central bank’s accommodative policy disposition in the year 2020, evidenced by its sustained developmental finance efforts and deliberate interest rate reduction. On the other hand, we also acknowledge the efforts by fiscal authorities in quickening recovery via the Economic Sustainability Plan. However, the stimulus provided by fiscal and monetary authorities (c.3% of GDP) was largely insufficient to achieve desired outcomes even as policy responses failed to address the structural challenges stifling productivity across sectors. Accelerating the pace of economic recovery requires fiscal and monetary authorities to be well coordinated to promote growth-enhancing and confidence-building policies that would encourage more private capital inflows into the economy,” it said.
Also commenting, the Manufacturer Association of Nigeria (MAN) called for the sustenance of the momentum to finally and convincingly get Nigeria out of recession.
MAN Director General, Segun Kadiri, said the NBS report that indicated that Nigeria’s Gross Domestic Product (GDP) grew by 0.11 per cent (year-on-year) in real terms in the fourth quarter of 2020 is a welcome departure from the negative growths the nation have witnessed in the past quarters.”