Nigeria’s economy, currently in recession after two consecutive contractions in second and third quarters of this year, could rebound through the Implementation of the Economic Sustainability Plan 2020 and the early passage of 2021 budget.
Uche Uwaleke, a professor of Capital Market at the Nasarawa State University, Keffi, told BusinessDay on Saturday that in terms of economic contraction occasioned by COVID’19, Q2 2020 represents the worst experience for Nigeria.
“The NBS Q3 real GDP number is a confirmation of the fact that in terms of economic contraction occasioned by COVID’19, Q2 2020 represents the worst experience for Nigeria,” Uwaleke said.
“Compared to a contraction of 6.10 percent in Q2 of this year, it is actually an improvement reflective of the ease in lockdowns and movement restrictions, the reduction in the cases of COVID’19 and the gradual return of investor confidence in the economy,” he said.
Uwaleke said this improved confidence has also manifested in PMI readings and stock market performance.
“This explains why, although still in the negative territory, sectors like Manufacturing, Trade, Transportation and Education recorded improvements over the Q2 numbers,” he said.
The analyst observed that the disappointing performance in the agriculture sector in real terms, which came in at 1.39 percent, was caused by insecurity in many parts of the country with high food inflation rate now above 17 percent.
He expressed optimism that through the implementation of the Economic Sustainability Plan and early passage of 2021 Budget, the country could come out of recession.
“Yes, the economy has officially entered a recession but I see a quick V-shaped recovery as the effect of COVID’19 recedes and the impact of the interventions by the government and CBN begin to manifest, including the implementation of the Economic Sustainability Plan,” Uwaleke said.
“The early passage of the 2021 Appropriation Bill will also go a long way in supporting economic recovery,” he said.
Nigeria’s economy contracted by 3.62 percent in third quarter 2020 after it contracted 6.1 percent in second quarter, according to official Gross Domestic Product report released by the National Bureau of Statistics (NBS) on Saturday, thus sliding into its second recession in five years.
The report showed that the growth in Q3 2020 was slower by 5.90 percent points when compared to the third quarter of 2019, which recorded a real growth rate of 2.28 percent year on year.
In August 2020, the NBS had said that the economy shrank by 6.10 in Q2 largely due to significantly lower levels of both domestic and international economic activity resulting from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.
It would be recalled that the economy slipped into recession in Q2 2016 as the GDP shrank by 2.1 percent after falling by 0.4 percent in Q1 of that year on the back of the steep fall in global crude oil prices and the country’s production volumes.
