Nigeria’s economy may have contracted by less compared with several other countries faced with the pandemic-induced recession this year, but the pain of the recession is most felt in Nigeria where poverty is rife and economic growth has been tepid.
BusinessDay collated key economic metrics that capture the living standards of Nigerians as well as the health of the economy and compared it with 39 other countries in recession.
The 40 countries surveyed include United States, Japan, United Kingdom, India, Brazil, Russia, South Africa, Austria, Germany, Switzerland, Belgium, Canada, Denmark, Estonia, Finland, Hungary, Ireland, Italy, Latvia, Lithuania, Mexico, Netherlands, Norway, Romania, Spain, Peru, Turkey, Israel, Poland, Czech Republic, Thailand, Singapore, Malaysia, South Korea, Australia, Portugal, France, Indonesia, and Hong Kong.
After collating and comparing data on GDP per capita (average incomes), inflation rate, unemployment rate and poverty rate in all the countries, Nigeria ranked the worst in two metrics (inflation and poverty) and was among the bottom two in the others (unemployment rate and GDP per capita).
Take the analogy of Peter & Paul, which sums up the weakness of analysing the country worst hit by the economic upheaval by the size of the economic contractions in isolation.
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Peter earns a monthly pay of N10,000 but has now been forced to take a pay cut of 5 percent, which leaves N9,500 as the new pay.
Paul on the other hand earns N1 million and must now take a pay cut of 10 percent, which leaves a balance of N900,000.
Paul can be wrongly misconstrued as the worst hit of both individuals because he suffered a pay cut of 10 percent compared to Peter, but the real incomes of both individuals tell a different story; one that Peter is actually worse hit given his relatively meagre salary compared to Paul.
A lot of the other countries currently in recession are better off economically than Nigeria and boast superior average incomes.
For Nigeria, the economy has barely trudged along since the last recession in 2016, with average incomes contracting every year since 2015. This year’s recession simply made a bad situation worse.
GDP per capita
Nigeria has the second lowest per capita income of all the countries in recession at $2,386, following India closely with a per capita income of $2,169. However, the IMF has projected that India is likely to bounce back with an impressive 8.8 percent growth rate in 2021, thus regaining the position of the fastest growing emerging economy, surpassing China’s projected growth rate of 8.2 percent. This puts India at a better advantage than Nigeria, which is projected to grow just 1.7 percent in 2021.
Inflation
Nigeria also has the highest inflation rate of all the countries in a recession. Nigeria’s inflation rate quickened to 14.23 percent, which is the highest in almost three years as food prices continue to soar. Turkey, India and Mexico followed with 11.89 percent, 7.61 percent and 4.09 percent, respectively. Other countries like Japan, Estonia, Ireland, Italy and 10 others have negative inflation rates.
Unemployment
Of all the countries in a recession, Nigeria has the second highest unemployment rate at 27.1 percent closely behind South Africa with an unemployment rate of 30.8 percent.
Poverty
Nigeria overtook India as the poverty capital of the world in 2018 with about 89 million poor Nigerians, which is about 40.1 percent of its population. This implies that four out of every 10 Nigerians spend less than $1 every day.
According to economists, poverty rate will increase to 42.5 percent in 2020, thereby pushing 5 million Nigerians into poverty this year.
