Nigeria to Slide Into Recession if COVID-19 Persists

• Nigeria to Slide Into Recession if COVID-19 Persists

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has said the Nigerian economy could slide into recession if the coronavirus pandemic persisted for the next six months or a year.

The minister made the statement during a brief appearance on Channels Television earlier today.

She said, “We are hopeful that this pandemic will be limited in time. If it is an average of three months, we should be able to close the year with positive growth.

“But if it goes longer than that – six months, one year – we will go into recession.”

This was after the International Monetary Fund had said the global economy was negative, adding that not less than 80 countries have approached the institution for funds.

Kristalina Georgieva, the Managing Director, IMF, said, “We have reassessed the prospect for growth for 2020 and 2021. It is now clear that we have entered a recession – as bad as or worse than in 2009.

“We do project recovery in 2021 – in fact, there may be a sizeable rebound, but only if we succeed with containing the virus – everywhere – and prevent liquidity problems from becoming a solvency issue.

“A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but can erode the fabric of our societies.”

She added, “We have seen an extraordinary spike in requests for the IMF emergency financing – some 80 countries have placed requests and more are likely to come. Normally, we never have more than a handful of requests at the same time.”

A Nigerian professor of capital market studies, Uche Uwaleke, explained that the IMG statement would worsen Nigeria’s economic position.

According to him, “The implication for Nigeria is that world trade had dropped; trade between Nigeria and other countries will suffer; there will be more capital flight because foreign investors will move to an economy that is safer.

“It has implications for export particularly oil which would lead to lower revenue for Nigeria; our trade and investment will also fall. If care is not taken, except the CBN continues to defend the naira, it will affect exchange rate.”