Nigeria is out of recession, it has been announced. But President Muhammadu Buhari and economists, who are as excited as many Nigerians, are cautious, saying we should not lower our guard.
The National Bureau of Statistics (NBS) in a Gross Domestic Product (GDP) Report for Second Quarter 2017 released by the bureau in Abuja, said Nigeria’s GDP grew by 0.55 per cent (year-on-year) in real terms in the quarter, indicating the emergence of the economy from the recession into which it slipped in 2016.
The Bureau stated that the figure indicated that the economy was out of recession after five consecutive quarters of contraction since first quarter 2016.
An economy is said to be in recession after contracting for two consecutive quarters.
The bureau, however, stated that the growth in the quarter was 2.04 per cent higher than the rate recorded in the corresponding quarter of 2016 (–1.49 per cent).
It is higher by 1.46 per cent points from the rate recorded in the preceding quarter (revised to –0.91 per cent from – 0.52 per cent).
Quarter on quarter, the bureau stated that real GDP growth was 3.23 per cent, adding that during the quarter, aggregate GDP stood at N26, 986,005.20 million, resulting in a Nominal GDP growth of 14.60 per cent.
The growth is higher relative to the growth recorded in the second quarter 2016 (3.01 per cent)
The report also showed that the economic recovery was driven by improved performance of oil, agriculture, manufacturing and trade sectors.
Speaking on the report yesterday in his home town Daura in Katsina State after receiving visiting Nigerien President Mahamadou Issoufou, President Buhari said the real impact of exiting the recession would be better felt when ordinary Nigerians experience a change in their living conditions.
He said he was “very happy’’ to hear the country was finally out of recession, adding:
”Certainly, I should be happy for what it is worth. I am looking forward to ensuring that the ordinary Nigerian feels the impact.”
“Until coming out of recession translates into a meaningful improvement in peoples’ lives, our work cannot be said to be done,’ the President said and commended all the managers of the economy for their hard work and commitment, stressing that more work needed to be done to improve the growth rate.
A statement by the Economic Adviser to the President, Dr Adeyemi Dipeolu, said the administration would continue to drive Nigeria’s economic growth by vigorously implementing the Economic Recovery & Growth Plan (ERGP) launched earlier this year by President Buhari.
He said the overall economic plan and direction of the administration had resulted, among others, in sustained restoration of oil production levels (occasioned by the enhanced security and stability in the Niger Delta), sustained growth in agriculture, mining and the first growth recorded in industry as a whole in the last nine quarters since Q4 2014.
Dipeolu said: “The figures released by the National Bureau of Statistics for the second quarter of this year (Q2 2017) show that the economy grew in Q2 2017 by 0.55% from -0.91% in Q1 2017 and -1.49% in Q2 2016.
“This, in effect means that the Nigerian economy has exited recession after five successive quarters of contraction.
“This positive growth is attributable to both the oil and non-oil sectors of the economy. Growth in the oil sector, which has been negative since Q4 2015, was positive in Q2 2017. It rose by 1.64% as compared to -15.60 in Q1 2017, an increase of up to 17 percentage points.
“This improvement is partly due to the fact that oil prices, which have improved slightly from the lows of last year, have been relatively steady as well as the fact that production levels were being restored.
“The non-oil sector grew by 0.45% in Q2 2017, a second successive quarterly growth after growing 0.72% in Q1 2017. This increase, which was not quite as strong as it was in Q2 2016, reflects continuing fragility of economic conditions. However, given that nearly 60% of the non-oil sectors contribution to GDP is influenced by the oil sector, growth in the oil sector will help boost the rest of the economy,” he added
According to the presidential adviser, the positive growth seen in agriculture when the rest of the economy was contracting was maintained at 3.01%, which was encouraging especially if seasonal factors are taken into account.
“Manufacturing growth was also positive at 0.64% and although lower than the previous quarter’s growth of 1.36%, it was a noticeable improvement over the -3.36% experienced in Q2 2016 and a continuation of the turnaround of the sector. Solid minerals, which remain a priority of the Administration, also continued to grow and in Q2 2016 by 2.24%.
“Overall, the industry as a whole grew by 1.45% in Q2 2017 after nine successive quarters of contraction starting in Q4 2014.”
Dipeolu pointed out that the positive development was somewhat overshadowed by the continued decline in the services sector which accounts for 53.7% of GDP.
“Nevertheless, electricity and gas, as well as financial institutions, grew by 35.5% and 11.78% respectively in Q2 2017.
“The GDP figures give grounds for cautious optimism, especially as inflation has continued to fall from 18.72% in January 2017 to 16.05% in July 2017.
“Foreign exchange reserves have similarly improved from a low of $24.53 in September 2016 to about $31 billion in August 2017. In the same vein, capital importation grew by 95% year-on-year driven by portfolio and other investments but also notably by foreign direct investment which increased by almost 30% over the previous quarter.”
Foreign trade, he said, has also contributed to improving economic conditions with exports amounting to N3.1 trillion in Q2 2017. Imports, which increased by 13.5%, amounted to N2.5 trillion in the same period.
“The overall trade balance thus remained positive at N0.60 trillion,” he said.
Unemployment, however, remains relatively high, but job creation is expected to improve as businesses and employers increasingly respond more positively to the significantly improving business environment and favourable economic outlook.
“Besides, as key sectoral reforms in both oil and non-oil sectors gain traction, the successful implementation of ERGP initiatives, such as N-Power and the social housing scheme, will boost job creation.
“Food inflation also bears watching as it has remained quite high and volatile due mostly to high transport costs and seasonal factors, such as the planting season. Investments in road and rail infrastructure, increased supply and availability of fertilisers and improvements in the business environment should contribute to the easing of food prices.
“Overall, the end of the recession is welcome but economic growth remains fragile and vulnerable to exogenous shocks or policy slippages. Accordingly, it remains essential to intensify efforts going forward on the implementation of the ERGP to achieve desired outcomes including sustained inclusive growth, further diversification of the economy, the creation of jobs and improved business conditions.”
Also yesterday, presidential spokesman Femi Adesina described Nigeria’s exit from recession as a clear testimony that Buhari’s administration was working for the prosperity of all Nigerians.
He told a solidarity rally for the Federal Government organised by the Centre for Civil Society and Justice.
Adesina said: “You have chosen a very auspicious day for this solidarity rally. Earlier today, we were told that Nigeria had officially exited recession.
“That shows that we have a government that is working for us. We have a government that is interested in our welfare. We have a government that is interested in our well-being.
“Recession came due to some mistakes of the past and in just about a year, the government battled it and today we are officially out of recession and we give all glory to God.’’
Adesina assured the rally that he would relay its message of support and solidarity on the unity of Nigeria to the President.
“You know the President swore to uphold the Constitution and the Constitution recognises Nigeria as one indissoluble entity.
“The President has sworn to keep the unity of the country and whatever it takes; he will keep to that pledge,’’ he said.
The presidential aide advised those ‘‘beating the drums of separation’’ to keep their peace, adding that the government is resolute to preserve the unity, cohesion and togetherness of Nigeria.
The convener of the rally, Comrade Goodluck Obi, said the group wholeheartedly supported Buhari’s uncommon resolve to fix a nation “plundered and pillaged by irresponsible leadership in the past at various levels of government’’.
Obi called on the National Assembly and the Judiciary to support the executive in the war against corruption, insurgency and economy recovery programmes.
“We want to sound a note of warning to both organs of government, that we the Nigerian people would no longer allow our collective destiny to be toyed with like a game.
“We are more than ever ready to mobilise the people to do the needful within the ambit of the law. Enough is Enough,’’ he said.
For some economic analysts, it’s no time to fully rejoice yet. Former Executive Director Keystone Bank, Richard Obire, said Nigeria’s exit from recession will trigger more investments from local and international investors. He said the psychology underpinning economics is that if people have a positive outlook about the economy, they are more likely to invest in such economy.
He said the growth recorded was slim and needed more hard work to be sustained. “Being out of recession gives the people positive boost that there is hope for the future and that hope will bring about more capital inflows into the economy.
“We’re out of recession because we registered two-quarters of positive growth. But that does not mean we are out of the woods yet because we could slip back into recession if the growth indicators are not sustained,” he said adding that “We can still slip back very easily. We need to liberalise policies. Let’s avoid political statements that would destabilise the economy especially as the 2019 election approaches.”
Managing Director Cowry Assets Management Limited, Johnson Chukwu, said the report gives economic managers hope and will give investors confidence to return to the country.
“No foreign direct investor wants to go to an economy that is in recession but the economy needs to grow at a higher rate. We need to ensure that inflation comes down to boost people’s purchasing power.”
Director- General of Lagos Chamber of Commerce & Industry (LCCI) Muda Yusuf, said the news is a welcome development as it has a positive signalling effect to the global investing committee.
He said the exit would improve the perception of the economy, especially by foreign investors as it would no longer be characterised as an economy in recession.
“What ultimately matters to business is the impact on the cost of doing business, the productivity of the economic players, competitiveness of firms and the sustainability of investment. At the level of the individual citizens, what matters is the welfare effect of the GDP numbers. The impact on food prices cost of healthcare, transportation cost, power supply and the purchasing power. These are some of the ultimate outcomes that would determine whether or not the exit from recession will be celebrated.”
