The Nigerian economy has for the first time in three years recorded a negative economic growth of -6.10% for the second quarter of 2020, according to the Gross Domestic Product Report released by the National Bureau of Statistics (NBS).
Since the 2016/17 economic recession in the country, the West African country has consistently recorded positive economic growth rates.
This latest report comes as a huge setback for the oil producing country who are now just a quarter away from another recession if the situation doesn’t change.
The negative growth recorded was attributed to the negative impact of the COVID-19 pandemic.
According to the report; “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, 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.
Figure 1. Real GDP growth
Source: National Bureau of Statistics, 2020.
In the quarter under review, aggregate GDP stood at N34,023,197.60 million in nominal terms, or -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. For better clarity, the Nigerian economy has been classified broadly into the oil and non-oil sectors. With regards to the oil sector, an average daily oil production of 1.81 million barrels per day (mbpd) was recorded in the second quarter of 2020.
This was -0.21mbpd lower than the daily average production of 2.02mbpd recorded in the same quarter of 2019, and –0.26mbpd lower than the first quarter 2020 production volume of 2. 07mbpd.The report further indicated that; “the non-oil sector declined by –6.05% in real terms during the reference quarter (Q2 2020). It was the first decline in real non-oil GDP growth rate since Q3 2017.
The recorded growth rate was –7.70% points lower compared to the rate recorded during the same quarter of 2019, and –7.60% points compared to the first quarter of 2020.
Nevertheless, non-oil sector output was driven by Financial and Insurance. In terms of sectorial analyses of growth in the second quarter of 2020, Transport and Storage, Accommodation and Food Services, Construction, Education, Real estate and Trade among others sectors which experienced the highest negative growth rates. 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%) “Real GDP in the Mining and Quarrying sector decreased by –6.60% (year-on-year) in the second quarter of 2020.
Compared to the same quarter of 2019 and first quarter 2020, it was lower by -13.60% points and –11.18% points respectively. Quarter on quarter, growth rate recorded was –9.66%, which means value added in second quarter 2020 was lower than in first quarter 2020”.
The Mining & Quarrying sector consists of Crude Petroleum and Natural Gas, Coal Mining, Metal ore and Quarrying and other Minerals sub-activities. This sector declined nominally by –16.02% (year on year) in Q2 2020. Quarrying and other minerals exhibited the highest growth rate of all the sub-activities at 44.02%, followed by coal mining activity at 18.75%.
However, Crude Petroleum and Natural gas was the main contributor to the sector with a weight of 97.53% in Q2 2020.
In real terms, the agricultural sector grew by 1.58% (year-on-year) in the second quarter of 2020, a decrease of –0.21% points from the corresponding period of 2019, and –0.62% points from the preceding quarter. On a quarter on quarter basis, the sector grew at 6.57%.
Further, the sector contributed 24.65% to aggregate real GDP in Q2 2020, higher than the contributions in the second quarter of 2019 and the first quarter of 2020 which stood at 22.78% and 21.96% respectively.
The report indicated that most of the sectors recorded negative growth rates, and stringent measures are required to lift growth rates in the third quarter without which the economy heads into another recession.
