Officially, Nigeria’s Economy Sinks 6.1% amid COVID-19 Outbreak

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Officially, Nigeria’s economy sinks 6.1% amid COVID-19 outbreak

Nigeria’s economy shrinks 6.1% amid covid-19 outbreak, the nation’s gross domestic products (GDP) growth data for Q2’20 released by the National Bureau of Statistics (NBS) has shown.

According to the report, the Nigerian economy contracted by 6.1% year on year in Q2’20.

The GDP contraction represented the steepest economic decline in Nigeria in over 3 decades and was driven by COVID-19 induced weaknesses in oil and non-oil output.

Agriculture expanded by a modest 1.6%, but Industries and Services contracted by 12.1% and 6.8% respectively.

Officially, Nigeria's Economy Sinks 6.1% amid COVID-19 Outbreak
President Muhammadu Buhari

Sectors with the steepest declines include Transport and Storage (-49.1%), Accommodation and Food Services (-40.2%), Construction (-31.7%), Education (-24%), Real estate (-22.0%) and Trade (-16.6%)

NBS said the decline was largely attributable 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.

The domestic efforts ranged from initial restrictions of human and vehicular movement implemented in only a few states to a nationwide curfew.

There was total 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.

When compared with Q2 2019, which recorded a growth of 2.12%, the Q2 2020 growth rate indicates a drop of –8.22% points, and a fall of –7.97% points when compared to the first quarter of 2020 (1.87%).

Consequently, for the first half of 2020, real GDP declined by –2.18% year on year, compared with 2.11% recorded in the first half of 2019.

Quarter on quarter, real GDP decreased by –5.04%.

Furthermore, only 13 activities recorded positive real growth compared to 30 in the preceding quarter.

In the quarter under review, aggregate GDP stood at N34,023,197.60 million in nominal terms.

This is 2.8% lower than the second quarter of 2019 which recorded an aggregate of N35,001,877.95 million.

Overall, the nominal growth rate was –16.81% points lower than recorded in the second quarter of 2019, and –14.81% points lower than recorded in the first quarter of 2020.

Cardinalstone said for better clarity, the Nigerian economy has been classified broadly into the oil and non-oil sectors.

In the second quarter of 2020, Nigeria records an average daily oil production of 1.81 million barrels per day (mbpd) was recorded.

NBS said this was -0.21 mbpd lower than the daily average production of 2.02 mbpd recorded in the same quarter of 2019, and –0.26 mbpd lower than the first quarter 2020 production volume of 2.07 mbpd.

Real growth of the oil sector declined 6.63% year-on-year in Q2 2020 indicating a decrease of 13.80% points relative to the rate recorded in the corresponding quarter of 2019.

Growth decreased by 11.69% points when compared to Q1 2020 which recorded 5.06%. Quarter-on-Quarter, the oil sector recorded a 10.82% negative growth rate in Q2 2020.

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By data, the Oil sector contributed 8.93% to total real GDP in Q2 2020, down from figures recorded in the corresponding period of 2019 and the preceding quarter, where it contributed 8.98% and 9.50% respectively.

Similarly, the non-oil sector declined by 6.05% in real terms in Q2, NBS stated that this was the first decline in real non-oil GDP growth rate since Q3 2017.

The recorded growth rate was negative 7.70% points lower compared to the rate recorded during the same quarter of 2019, and negative 7.60% points compared to the first quarter of 2020.

Nevertheless, non-oil sector output was driven by financial and insurance (Financial Institutions), Information and Communication (Telecommunications), Agriculture (Crop Production), and Public Administration, moderating the economy-wide decline.

On the other hand, NBS said sectors which experienced the highest negative growth included Transport and Storage, Accommodation and Food Services, Construction, Education, Real estate and Trade among others.

In real terms, the non-oil sector accounted for 91.07% of aggregate GDP in the second quarter of 2020, slightly higher than the share recorded in the second quarter of 2019 (91.02%) as well as the first quarter of 2020 (90.50%).

Officially, Nigeria’s economy sinks 6.1% amid COVID-19 outbreak

Detail review later.

 

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