Out of a total of 46 activity sectors of the Nigerian economy, 17 exited recession (a prolonged period of negative growth) in the second quarter (Q) of 2021, thereby contributing to Nigeria’s Gross Domestic Product (GDP) of 5 percent, the highest since 2014, a BusinessDay analysis shows.
Data from the recent Q2’ 2021 GDP report by the National Bureau of Statistics (NBS) show that most of the sectors had been in the negative territory since Q2’ 2020 when the COVID-19 lockdown and restrictions started.
But this is nothing to cheer as the expansion of the sectors is just based on data and not on real impact.
“The low base effect (the tendency of a small absolute change from a low initial amount to be translated into a large percentage change) led to an acceleration of growth in the sectors. We are still way off what we used to be before the pandemic. So, overall it is a decent recovery but still a long way to go,” Ayorinde Akinloye, an analyst at United Capital plc, says.
Read Also: Nigeria economy yet to heal after highest GDP growth since 2014
Also, Ayodeji Ebo, head, Retail Investment, Chapel Hill Denham, notes that based on the data we can say that they are out of recession but the main thing to look out for is if they are able to sustain their positive growth in the next quarter.
“If that happens then we can say they are fully out of recession because they are able to withstand the challenges of the economy e.g. high prices, FX volatility, insecurity, low incomes etc,” Ebo states.
Here are the sectors that exited recession in Q2’ 2021:
Education:
The sector had been recording negative growth for the past four quarters till it expanded by 0.63 percent in Q2’ 2021 from -24.12 percent in Q2’ 2020.
The sector was among the other sectors that were adversely affected by the impact of COVID-19 pandemic. The lockdown measures to curb the spread of the virus led to school closures, poor learning, unequal access to education opportunities, poor skills, salary cuts, loss of jobs for teachers, and parents’ inability to pay school fees was a loss to school owners leading to debts.
Insurance:
The insurance sector grew by 15.68 percent in Q2’ 2021 after contracting since Q1’ 2020 (-29.53%). In 2020, a PwC report cited that for insurers, the fallout from the COVID-19 outbreak included a surge in health, travel and business interruption claims, pressure on sales from reduced business activity for insurers, and less use of face-to-face channels.
“The gathering economic slowdown emanating from the pandemic drove interest rates even lower, and increasing credit risk exposures from businesses facing possible default,” the report stated.
Read Also: Nigerian government anticipates sustained 5% GDP growth in 2021
Trade:
This sector, which can be likened to the barometer of consumer purchasing power, has been in and out of negative growth territory since 2016, but at a marginal level over myriad challenges ranging from unpredictable government policies to weak consumer demand.
But it returned to positive growth in Q2’ 2021, ending eight consecutive quarters of contraction. The positive growth recorded in Q2 (22.49%) is the first one since Q2’ 2019 (-0.25%).
Air transport:
This sector grew by 4.98 percent in Q2 after consecutively recording negative growth since Q2 last year ( -57.38%). Some of the negative impacts of the pandemic on the sector include closure of airports and banning of flights, increasing industry debt profile, negative impact on tourism, increased competitive pricing and severe loss of jobs
Arts, entertainment and recreation:
The sector expanded by 1.22 percent in Q2, after consecutively recording four negatives since Q2’ 2020.
This sector depends on the audience of people for finance, thus making the pandemic impact the sector negatively. The pandemic brought a halt to the performer/audience physical participation and interaction, and a lot of reduction in the socio-economic progress of entertainers and the industry depends on their audience for finance.
Road transport:
Out of all the 17 sectors, road transport had the highest growth of 92.38 percent in Q2’ 2021.
The lockdown measures, restriction on interstate travels, violent kidnappings, robberies and banditry across major highways in Nigeria had impacted the sector.
Publishing:
Education and literacy are the major drivers of the publishing sector in Nigeria. So, it is no surprise that the closure of bookshops and cancellation of book fairs affected the growth of the sector.
According to Gbadega Adedapo, the president, Nigerian Publishers Association, the book industry lost over N10 billion to the pandemic.
The rest of the sectors are textile, apparel & footwear; wood & wood products; pulp, paper & product; electrical and electronics; basic metal, iron & steel; accommodation & food services; water transport, professional; scientific & technical services, administrative & support service, and other services.
