23 Nov NIGERIA’S ECONOMY
Economic recession represents a significant decline in economic activity. It is said to be the negative growth of GDP that lasts more than two months and visible in the wholesale-retail sales, gross domestic product, real income, and employment. It is the negative growth of GDP which lasts more than two months.
The last recession Nigeria experienced was in 2016 and it was said to be the worst recession in 29 years according to the then Finance Minister, Kemi Adeosun. The inflation rate was 17.01% and the GDP declined by 2%. The latest recession in 2020 had a GDP decline by 6.10% in Q2,2020.
The worst recession the country has ever entered was in 1984, 2016, and 2020, all during the regime of the current Nigeria president, President Muhammadu Buhari.
The World Bank in its June 25, 2020 report had projected that Nigeria would slip into a severe economic recession, the worst since the 1980s. Shubham Chaudhuri, World Bank country director for Nigeria, recommended: “While the long-term economic impact of the global pandemic is uncertain, the effectiveness of the government’s response is important to determine the speed, quality, and sustainability of Nigeria’s economic recovery. Besides immediate efforts to contain the spread of COVID-19 and stimulate the economy, it will be even more urgent to address bottlenecks that hinder the productivity of the economy and job creation.’’
Inflation in the country has been on a spike when land borders were closed in 2019 which contributed to higher inflation- especially for food. In the past few decades, the inflation rate has been quite unstable, from as high as 17.86% in 2005 to as low as 5.4% in 2007.
The goal of every Central Bank is to keep the economy above deflation and below inflation but Nigeria’s CBN has been failing at it for a long time. It is unable to react fast enough to the rising inflation. Some causes of inflation majorly can be attributed to civil unrest, Government economic policies, devaluation of naira which affects the economy due to lower purchasing power.
Nigeria’s gross domestic product (GDP) recorded a growth rate of -3.62% in the third quarter of 2020. While this represents an improvement of 2.48% points over the -6.10% growth rate recorded in the preceding quarter (Q2 2020), it also indicates that two consecutive quarters of negative growth have been recorded in 2020. Furthermore, growth in Q3 2020 was slower by 5.90% points when compared to the third quarter of 2019 which recorded a real growth rate of 2.28% year on year.