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COVID-19 Plunges Nigeria’s GDP by the Most, Contracts by 6.10% in Q2 2020

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Manufacturers

Nigeria’s Economy Contracts by 6.10% in Q2 2020 as COVID-19 Bites

Nigeria’s economy contracted by the most on record in the second quarter as COVID-19 negative impacts plunged activities, according to the data released by the National Bureau of Statistics (NBS) on Monday.

Africa’s largest economy contracted by 6.10 percent year-on-year in real terms in the quarter under review. Bringing an end to a 3-year of low but steady economic recovery started after the 2016 economic recession.

NBS attributed the decline to drop in global and local economic activities due to the global pandemic that disrupted both logistics and global economic activities during the quarter.

Nigeria’s revenue generation plunged to a record-low during the period as low oil price and weak demand dragged on the nation’s foreign reserves and ability to services its petrol-dollar economy.

The domestic efforts ranged from initial restrictions of human and vehicular movement implemented in only a few states to a nationwide curfew, bans on domestic and international travel, closure of schools and markets etc., affecting both local and international trade. The efforts, led by both the Federal and State governments, evolved over the course of the quarter and
persisted throughout,” the NBS noted.

However, when compared with the same period of 2019, when the economy grew by 2.12 percent, the economy declined by 8.22 percent and recorded a 7.97 percent decline when compared to 1.87 percent posted in the first quarter of 2020.

Accordingly, Nigeria’s real GDP contracted by 2.18 percent year-on-year in the first half of the year, down from 2.11 percent growth recorded in the same period of 2019.

On a quarterly basis, the real economy decreased by 5.04 percent. The report noted that only 13 sectors recorded positive real growth in the quarter, down from 30 posted in the first quarter.

Similarly, aggregate GDP declined by 2.8 percent from N35,001,877.95 million achieved in the corresponding quarter of 2019 to N34,023,197.60 million in nominal terms.

In general, the nominal growth rate contracted by 16.81 percent and 14.81 percent when compared with the second quarter of 2019 and the first quarter of 2020.

Oil Sector

During the period under review, Nigeria’s daily crude oil production stood at 1.81 million barrels per day (mbpd), representing 0.21 mbpd decline from 2.02 mbpd posted in the same period of 2019 and 0.26 percent lower than the 2.07 mbpd pumped in the first quarter of 2020.

Despite the reasonable moderate production level, growth in the oil sector contracted by 6.63 percent year-on-year in the second quarter, a decrease of 13.80 percent when compared to the corresponding period of 2019. Growth in the sector declined by 11.69 percent from 5.06 percent growth achieved in the first quarter.

On a quarterly basis, the sector contracted by 10.82 percent. Largely due to weak global demand for the commodity, especially the expensive Nigerian oil when compared to Saudi Arabia and Iraq offering huge discounts to sustain sales.

Still, the sector contributed 8.93 percent to the total real economy in the second quarter, lower than the corresponding period of 2019 and the preceding quarter, where it accounted for 8.98 percent and 9.50 percent, respectively.

Non-oil Sector

The real GDP of the non-oil sector contracted by 6.05 percent in the reference quarter. The first decline since the third quarter of 2017 and represents a 7.70 percent decline from the number posted in Q2 2019 and 7.60 percent lower than the first quarter of 2020 result.

Output in the sector was driven largely by Financial and Insurance, Information and Communication, Agriculture and Public Administration. NBS said these four non-oil sectors moderated the economy-wide decline.

According to the bureau, the Transport and Storage, Accommodation and Food Services, Construction, Education, Real estate and Trade experienced the largest decline in the quarter under review.

The non-oil sector accounted for 91.07 percent of Nigeria’s aggregate GDP in real terms. Again, higher than the 90.50 percent recorded in the first quarter and 91.02 percent posted in the same period of 2020.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Prepaid Meter is Free, Buhari Warns DisCos, Agents

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prepaid meter

President Muhammadu Buhari once again warned Power Distributing Companies (DisCos) and their agents selling prepaid meters to electricity customers against the Federal Government directive that meter is free.

Ahmed Rufai Zakar, the Special Adviser to the President on Infrastructure, who represented Buhari at the FGN/NLC-TUC ad-hoc committee on electricity tariff stakeholders held in Ibadan, Oyo State on Wednesday, said President Buhari understood people’s concerns on issues surrounding electricity and was determined to curb and deal with unscrupulous individuals in the power sector.

He said, “We have made it very clear through the regulators direct order as well as intervention from the Ministry of Power that the meters are to be provided to Nigerians at no cost.

“Even for meters that were paid for, there is the directive from the regulator to the discos that they would need to find a way to reimburse those citizens over time.

“In cases where we find any disco or disco representative selling the meters or exploiting Nigerians to be able to get meters by paying, we would take the full measures of the law.

“The President has mandated that these meters must be free. We have also said that they must come from local manufacturers.

“This would create jobs and revive our industry.”

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Economy

Nigeria’s Real Estate Sector Shrinks by 8.06% in the Third Quarter -NBS

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Economic uncertainty plunged Nigeria’s real estate sector by 8.06 percent in the third quarter of the year, according to the National Bureau of Statistics (NBS).

Nigeria’s statistics office said “In nominal terms, real estate services recorded a growth rate of –8.06 per cent in the third quarter of 2020, indicating a decline of –11.78 per cent points compared to the growth rate at the same period in 2019, and by 9.12 per cent points when compared to the preceding quarter.

“Quarter-on-quarter, the sector growth rate was 18.92 per cent.

“Real GDP growth recorded in the sector in Q3 2020 stood at -13.40 per cent, lower than the growth recorded in third quarter of 2019 by –11.09 per cent points, but higher relative to Q2 2020 by 8.59 per cent points.

“Quarter-on-quarter, the sector grew by 17.15 per cent in the third quarter of 2020.

“It contributed 5.58 per cent to real GDP in Q3, 2020, lower than the 6.21 per cent it recorded in the corresponding quarter of 2019.”

Nigeria’s economy contracted by 2.48 percent in the first nine months following a 6.10 percent and 3.62 percent contraction in the second and third quarters respectively.

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Economy

Nigeria Requires N400 Billion Annually to Maintain Federal Roads -Senator Bassey

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lekki

The Chairman of the Senate Committee on road maintenance, Senator Gersome Bassey, on Friday said Nigeria requires about N400 billion annually to maintain federal roads across the country.

The Senator, therefore, described the N38 billion budgeted for road repairs in the 2021 proposed Budget as grossly inadequate. According to him, nothing meaningful could be achieved by the Federal Roads Maintenance Agency (FERMA) with such an amount.

He said, “For the 35 kilometres federal roads in the country to be motorable at all times, the sum of N400bn is required on yearly basis for maintenance.”

Bassey “What the committee submitted to the Appropriation Committee in the 2021 fiscal year is the N38bn proposed for it by the executive which cannot cover up to one quarter of the entire length of deplorable roads in the country.

“Unfortunately, despite having the power of appropriation, we cannot as a committee jerk up the sum since we are not in a position to carry out the estimation of work to be done on each of the specific portion of the road.

“Doing that without proposals to that effect from the executive, may lead to project insertion or padding as often alleged in the media.”

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