Uche Usim, Abuja
Economic experts have weighed in on the latest Gross Domestic Product (GDP) negative growth, which decreased by -6.10% (year-on-year) in real terms in the second quarter of 2020, saying it is in line with global expectations it happened in countries like the United Kingdom and Japan.
Nigeria’s first professor of the capital market, Prof Uche Uwaleke in a chat with Daily Sun said he was not surprised about the huge size of the contraction put at -6.10%.
“I think this is going to be the worst this year. A negative real GDP growth is also most likely to be recorded in Q3 2020 but the size will be smaller as the economy gets restarted and crude oil price gradually picks up.
To ensure the impact of these economic headwinds are moderated, Uwaleke said it was important to increase the size of the various interventions by the government and the Central Bank of Nigeria (CBN) and ensure they are well targeted and implemented.
“As a matter of fact, because it is based on year-on-year, when one considers the 2.12% positive real GDP growth this same period last year, the decline in GDP comes to as high as 8.22%.
“It is easy to see why this happened. The negative impact of COVID-19 on health which resulted in lockdowns and supply chain disruptions, the collapse in crude oil price and reduction in output in compliance with OPEC+ agreement, the illiquidity in the forex market and the lingering insecurity in the country which affected agriculture output are to blame.
“This explains why the Agriculture sector managed to eke out a growth rate of 1.58%, and manufacturing, trade and so many other sectors recorded negative growth”, he explained.
Uwaleke added that the lockdown and movement restrictions horribly affected the accommodation and food services sector which declined by as much as 40%.
Data from the National Bureau of Statistics (NBS) on Monday revealed that GDP decreased by –6.10% (year-on-year) in real terms in the second quarter of 2020, ending the three-year trend of low but positive real growth rates recorded since the 2016/17 recession.
The decline to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.