Recession worsens as economy shrinks by 2.24 percent

Ebun Francis

Nigeria’s economic recession worsened in the third quarter as the economy shrunk by 2.24 percent, according to figures released by the National Bureau of Statistics.

“The nation’s gross domestic product (GDP) contracted by -2.24 percent year-on-year in real terms,” the  Bureau said in a report.

This meant that third-quarter growth in Africa’s most populous country was 0.18 percentage points weaker than that recorded in the second quarter, and 5.1 points down from third quarter growth in 2015.

“During the period under review, oil production averaged at 1.63 million barrels per day (bpd),” the statistics agency said.

That is a 22-percent drop from the same period in 2015, when Nigeria was producing 2.17 million bpd.

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“Not only do the attacks have an instant impact on output, and cause major damage to infrastructure, but continued unrest will only further discourage international oil companies from investing in oil projects,” Rhidoy Rashid, oil analyst at Energy Aspects, said in a recent note.

“There seems to be no quick fix for uniting a heavily divided region, so for now we expect further attacks and subsequent volatility in Nigerian crude output.”

According to the agency, manufacturing  also took a big hit, shrinking by 2.9 percent in the third quarter in the wake of a devalued naira and currency controls that have curbed trade.

“This is partly due to the continued fall in the exchange rate, which makes imported inputs more expensive, thereby increasing business costs,” the statistics agency said.

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“This is greatly a result of the continued fall in (the) naira to dollar rate which translates to much higher cost of business operations.”

There is a growing consensus among economists that the crisis may persist for sometime, with the resumed bombing of oil installations by militants following the collapse of peace talks between the Nigerian government and the stakeholders in the region and the reluctance of foreign investors to venture into the economy because of unclear economic policy by government.