Presidency ‘Welcomes’ Exit From Recession, Says ‘Economic Growth Remains Fragile’
The Presidency says President Muhammadu Buhari’s administration welcomes news of Nigeria’s exit from recession with “cautious optimism”.
Consequently, it says it will continue to drive the nation’s economic growth by vigorously implementing the Economic Recovery and Growth Plan (ERGP) launched by the President in April.
The Presidency believes government’s overall economic plan and direction has resulted 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 the industry as a whole in the last nine quarters since Q4 2014 among others.
This was contained in a statement signed on Tuesday by the senior special assistant to the Vice President on media and publicity, Mr Laolu Akande.
The Presidency quoted the Special Adviser on Economic Affairs to the President, Dr Adeyemi Dipeolu, as saying, “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.”
Despite welcoming Nigeria’s exit from recession, the Presidency is staying cautious as it believes the economy is not fully out of the woods yet.
“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, creation of jobs and improved business conditions.”
Dipeolu, who attributed the positive growth to both the oil and non-oil sectors of the economy, said the growth in the oil sector which had been negative since Q4 2015 was positive in Q2 2017.
He added that it rose by 1.64% as compared to -15.60 in Q1 2017, saying it meant 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,” the presidential aide said in a statement.
The statement read further: “The positive growth seen in agriculture when the rest of the economy was contracting was maintained at 3.01% which is 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. This 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.”
Dipeolu explained that 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.
He said foreign exchange reserves have similarly improved from as low as $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 has also contributed to improving economic conditions with exports amounting to N3.1 trillion in Q2 2017 while 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.”
According to the President’s economic adviser, 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 favorable 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 infrastructures, increased supply and availability of fertilizers and improvements in the business environment should contribute to the easing of food prices.”