Citizens Are Getting Poorer Because Nigeria Is Borrowing For Wrong Reasons – Peter Obi

 

A former vice presidential candidate of the Peoples Democratic Party (PDP), Peter Obi says Nigerians are getting poorer because the government is borrowing for the wrong reasons.

Mr Obi, who was a guest on Channels Television’s Sunday Politics, argued that while it is not a crime to borrow money, the funds must be used solely for productions that enhance the lives of the citizens and enrich the economy.

“Are you borrowing for productivity or are you borrowing for consumption? My worry here is that we are borrowing for consumption.

“I am saying that the country is not productive and there is nothing wrong in borrowing; if you are borrowing, then it shouldn’t be for consumption and that’s why more and more people are getting poorer,” he asserted.

According to the former Anambra State governor, the nation’s Gross Domestic Product (GDP) cannot be growing while the people are getting poorer.

He believes the growth Nigeria needs is one which “pulls people out of poverty by making the people have disposable income and be able to feed themselves”.

Mr Obi further added that the nation needs the kind of growth that will educate the children and provide primary health care for all communities.

“These are critical areas we want to go into,” the statesman stressed, noting that Nigeria must do away with speculative growth that is given media hype without positively affecting the masses.

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Engine of Growth 

In a bid to chart a way forward, the astute businessman said that the biggest engine for economic growth is the micro, small, and medium enterprises.

“That engine today is not being supported in Nigeria. Nigeria has a total of 40 million SMEs but there is not properly articulated fiscal and monetary policy to support the critical sector.

“The entire loan to the private sector in Nigeria today is about N30 trn. Less than N1.5 trn is going to SMEs. This is less than five per cent of the entire loan. This means Nigeria is not supporting its engine that can enhance the nation’s economic growth.

“The SMEs are the biggest employer of labour in many advanced countries of the world. We need fiscal monetary policies that would invest in this engine of growth in order to create jobs.”

Peter Obi’s comments are coming about two weeks after Nigeria’s GDP grew by 5.01% (year-on-year) in real terms in the second quarter of 2021.

According to the National Bureau of Statistics (NBS), the increase in the GDP index marked three consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.

But the PDP stalwart maintained that the development is not a thing to rejoice about.

UPDATED: Nigeria’s GDP Records 5% Growth For Second Quarter

Nigeria has recorded its third consecutive quarterly growth, NBS reported on August 26, 2021,

 

Nigeria’s Gross Domestic Product (GDP) grew by 5.01% (year-on-year) in real terms in the second quarter of 2021, the National Bureau of Statistics (NBS) has said.

The NBS disclosed this in the latest report on the nation’s GDP entitled Nigerian Gross Domestic Product Report (Q2 2021) released on Thursday.

It explained that the increase in the GDP index marked three consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.

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“The Q2 2021 growth rate was higher than the -6.10% growth rate recorded in Q2 2020 and the 0.51% recorded in Q1 2021 year-on-year, indicating the return of business and economic activity near levels seen prior to the nationwide implementation of COVID-19 related restrictions,” the report read.

“The steady recovery observed since the end of 2020, with the gradual return of commercial activity, as well as local and international travel, accounted for the significant increase in growth performance relative to the second quarter of 2020 when nationwide restrictions took effect.

“Year to date, real GDP grew 2.70% in 2021 compared to -2.18% for the first half of 2020.”

Real GDP growth rate – Source: NBS

 

But the real GDP (quarter-on-quarter) grew at -0.79% in Q2 2021 compared to Q1 2021, indicating slightly slower economic activity than the preceding quarter due largely to seasonality.

In the quarter under review, the NBS revealed that the aggregate GDP stood at N39,123,713.32 million in nominal terms – higher than the second quarter of 2020 with aggregate GDP of N34,023,197.60 million, indicating a year-on-year nominal growth rate of 14.99%.

It added that the nominal GDP growth rate in Q2 2021 was higher than -2.80% growth recorded in the second quarter of 2020 when economic activities slowed sharply at the outset of the pandemic.

“The Q2 2021 nominal growth rate was also higher than 12.25% growth recorded in Q1 2021,” the agency said.

 

Oil, Non-Oil Sectors

In the oil sector, the NBS disclosed that the average daily oil production stood at 1.61 million barrels per day (mbpd) in Q2 2021, saying the value was -0.19mbpd lower than the average daily production of 1.81mbpd recorded in the same quarter of 2020, and -0.10mbpd lower than the 1.72mbpd recorded in the first quarter of 2021.

It stated that the real growth of the oil sector was –12.65% (year-on-year) in Q2 2021, indicating a decrease of –6.02% points relative to the growth rate recorded in the corresponding quarter of 2020.

Data from the report showed that growth decreased by – 10.44% points when compared to Q1 2021 which was –2.21%.

Crude Oil and Non-Oil Growth – Source: NBS

 

“For the first half of 2021, real GDP was recorded at -7.13%, compared to -0.80% for the first half of 2020, the performance reflecting lower oil output.

“Quarter-on-quarter, the oil sector recorded a growth rate of -20.35% in Q2 2021. The Oil sector contributed 7.42% to total real GDP in Q2 2021, down from figures recorded in the corresponding period of 2020, and down compared to the preceding quarter, where it contributed 8.93% and 9.25% respectively,” the report said.

It added, “The non-oil sector grew by 6.74% in real terms during the reference quarter (Q2 2021). The Q2 2021 growth rate was higher by 12.80% points compared to the rate recorded in the same quarter of 2020 and 5.95% points higher than the first quarter of 2021.”

The NBS explained that during the quarter, the sector was driven mainly by growth in Trade, Information and Communication (Telecommunication), Transportation (Road Transport), Electricity, Agriculture (Crop Production) and Manufacturing (Food, Beverage & Tobacco), reflecting the easing of movement, business and economic activity across the country relative to the same period a year earlier.

“In real terms, the non-oil sector contributed 92.58% to the nation’s GDP in the second quarter of 2021, higher from shares recorded in the second quarter of 2020 which was 91.07% and the first quarter of 2021 recorded as 90.75%,” the report said.

Nigeria’s GDP Records 0.51% Growth In 2021 First Quarter

Nigeria records another GDP growth for the second consecutive quarter.

 

Nigeria’s Gross Domestic Product (GDP) has recorded a growth of 0.51 per cent (year-on-year) in real terms in the first quarter of 2021.

The National Bureau of Statistics (NBS) disclosed this in the latest Nigerian Gross Domestic Product Report released on Sunday.

It noted that the new figure represented two consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.

The rate of growth recorded in the first quarter of 2021 was slower than the 1.87 per cent rate recorded in the first quarter of 2020.

However, the figure was higher than the 0.11 per cent recorded in the fourth quarter of 2020, indicative of a slow but continuous recovery.

 

“Nevertheless, quarter on quarter, real GDP grew at -13.93% in Q1 2021 compared to Q4 2020, reflecting a generally slower pace of economic activities at the start of the year.

“In the quarter under review, aggregate GDP stood at N40,014,482.74 million in nominal terms. This performance is higher when compared to the first quarter of 2020 which recorded aggregate GDP of N35,647,406.08 million, indicating a year-on-year nominal growth rate of 12.25 per cent,” the report read.

It added, “The nominal GDP growth rate in Q1 2021 was higher relative to 12.01 per cent growth recorded in the first quarter of 2020, as well as the 10.07 per cent growth recorded in the preceding quarter.

“For better clarity, the Nigerian economy has been classified broadly into the oil and non-oil sectors.”

The GDP report revealed that the oil sector contracted by 2.21 per cent, compared to the -19.76 per cent recorded in the fourth quarter of 2020, while non-oil GDP grew 0.79 per cent, lower than the 1.69 per cent positive growth in the preceding quarter.

 

According to the NBS, the growth in the non-oil sector was driven mainly by the Information and Communication (Telecommunication) sector.

Other drivers included agriculture (crop production); manufacturing (food, beverage, and tobacco); real estate; construction, human health and social services.

“In real terms, the non-oil sector accounted for 90.75 per cent of aggregate GDP in the first quarter of 2021, higher than its share in the first quarter of 2020 which was 90.50 per cent but lower than 94.13 per cent recorded in the fourth quarter of 2020,” the report said.

The second consecutive real GDP growth showed that the economy was slowly recovering after slipping into a recession following the negative growth rates recorded in the second and third quarters of 2020.

China GDP Grows Record 18.3% In First Quarter

 This file photo taken on April 17, 2020 shows two pedestrians carrying shopping bags along a street in Beijing. WANG ZHAO / AFP
This file photo taken on April 17, 2020 shows two pedestrians carrying shopping bags along a street in Beijing. WANG ZHAO / AFP

 

China’s economy expanded at a record pace in the first quarter as the country continued its rapid recovery from last year’s pandemic-fuelled slump, official data showed Friday.

The 18.3 percent explosion in gross domestic product growth was the fastest pace since quarterly records began three decades ago, but came off a historic contraction in 2020 during the depths of the pandemic.

It was also slightly short of forecasts in an AFP survey of economists.

While the coronavirus first emerged in central China in late 2019, the country was also the quickest to bounce back after authorities imposed strict control measures and consumers stayed home.

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“The national economy made a good start,” National Bureau of Statistics spokeswoman Liu Aihua told reporters Friday.

The sharp spike was partly due to “incomparable factors such as the low base figure of last year and increase of working days due to staff staying put during the Lunar New Year” holiday, said Liu.

Migrant workers were urged to remain in the areas where they work during the break owing to fears that the annual massive migration might lead to local outbreaks.

On a quarterly basis, GDP rose 0.6 percent from the last quarter of 2020, slowing slightly, a shift analysts attributed to a wave of local virus outbreaks which triggered travel restrictions and lockdowns.

Retail outperformance

In a sign that the country’s crucial consumer sector is getting back up to pace, the figures showed retail sales surged in March, bringing first-quarter growth to 33.9 percent as life largely returned to normal.

Industrial output rose a less-than-estimated 24.5 percent in the quarter.

The figures come days after officials announced that exports — and particularly imports — had rocketed in March.

Liu, however, warned that the international landscape still contained “high uncertainties”.

While vaccines are being rolled out around the world, the distribution is uneven and a pick-up in infections is forcing governments to reimpose containment measures, holding back recovery.

The urban unemployment rate, a figure analysts have been closely watching, ticked down slightly to 5.3 percent.

But economists expect growth drivers could change in the months ahead and have warned of an “uneven” recovery so far.

“Industrial production has been taking the lead in recovery last year, and it looks a bit tired now,” said UOB economist Ho Woei Chen.

“There is expectation that with retail sales’ outperformance and a recovering job market, that there is momentum picking up in private consumption,” she told AFP, adding that this should take over the lead in growth later in the year.

But Oxford Economics’ head of Asia economics Louis Kuijs cautioned that “a full rebound in household spending hinges on convincing vaccination and further improvements in labour market conditions”.

Beijing has been working to reposition its economy from a coal-powered manufacturing base to one powered by high-tech green energy and domestic consumption.

But the country’s strong post-pandemic recovery has been powered by coal, with a raft of new plants approved, and environmentalists are concerned this could stem the shift towards greener policies.

A report from analysis company TransitionZero on Thursday said China needed to “cancel all new coal immediately and indefinitely” and convert almost all of its coal fleet by 2040 in order to meet the zero-emissions target.

The economic data comes as US climate envoy John Kerry is in Shanghai for talks, and ahead of a Franco-German virtual climate summit Friday in which President Xi Jinping is set to take part.

 

AFP

FG Pledges To Spend Half Of GDP On Research, Innovation

Vice President Yemi Osinbajo SAN, delivering President Muhammadu Buhari’s Speech at the 2021 Tech & Innovation Expo at the Eagles Square, Abuja

 

 

The Federal Government has pledged that it will allocate half a percent of Nigeria’s Gross Domestic Product (GDP) to research and innovation in a determined effort to enhance the country’s economic growth and development.

President Muhammadu Buhari made the disclosure in a speech delivered on Monday by Vice President Yemi Osinbajo, SAN at the opening of the 2021 Technology and Innovation Expo themed “Science, Technology, and Innovation for Economic Recovery and Sustainability Amidst COVID-19 challenges”.

Speaking about the efforts of his administration in the past few years especially in budgetary allocation to the sector, the President said the measures adopted over the years have helped to increase research and innovation with the aim of achieving sustainable development.

Vice President Yemi Osinbajo chops knuckle with the First Place Prize Recipient of the 774 Young Nigerian Scientists Presidential Award Edeani Godswill at the 2021 Tech & Innovation Expo
at the Eagles Square, Abuja.

 

According to him, “We are happy that this has been achieved in line with the decision taken by the African Union’s Executive Council in 2006 to establish a target for all member States of 1% of GDP investment in Research and Development (R&D) in order to improve innovation, productivity, and economic growth.

“We are aware that only a few African countries have met this target, but as a result of the challenges of this critical sector of the economy, we will allocate a minimum of 0.5% of our GDP to research and innovation as a way to fast track meaningful development.”

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Commending the heroic contribution of Nigerian researchers and scientists in the wake of the COVID-19 Pandemic, President Buhari said “the COVID-19 Pandemic has asked tough questions of our national capabilities in the area of research and innovation. I am gratified to report that we are competently answering these questions through the commendable efforts of our researchers and scientists.”

Recalling how the first case of COVID-19 was recorded in Nigeria, the President stated that “what is less well known is that shortly after the patient was identified, a sample of the virus was sent to the African Centre of Excellence for Genomics of Infectious Diseases (ACEGID), at Redeemers University, Ede, Osun State.”

Continuing, he stated that “there, a team led by Professor Christian Happi, analysed the sample and was able within 48 hours to share the very first genome sequence of the Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2) from Africa with the global science community.

“This finding was shared faster than what was being done in some developed countries. More importantly, it was also much faster than sending it to a laboratory overseas. That last bit is very important as it is ground-breaking.”

Stressing the significance of the scientific breakthroughs, President Buhari said “not so long ago (before then), test samples had to be flown out of the country for examination. This is no longer the case because thanks to the efforts of our medical scientists and agencies like the Nigeria Centre for Disease Control (NCDC) we now have the capacity to process samples internally. Last December, the Nigerian Institute of Medical Research (NIMR) launched a new set of COVID-19 test kits that can produce results in 57 minutes. The new kit was designed by Joseph Shaibu, a molecular virologist at NIMR.

“These are a few examples of how Nigerian researchers, scientists and technologists are answering the demand of the present moment and providing solutions to our problems.

“As a Government, we are committed to providing an enabling environment for the Science and Technology Sector in order to unlock the enormous potential for innovation, wealth creation and economic growth.”

Speaking about the collaboration with the States to improve broadband penetration and connectivity, the President said “we are currently working to bridge the digital divide by increasing access to broadband with our National Broadband Plan with was launched this year.”

“The plan is aimed at achieving 90% broadband penetration by 2025. The plan will give special attention to the unserved and underserved areas when deploying telecom services. To achieve this, the Federal Government has also engaged with the State Governors at the National Economic Council on right of way charges for laying of broadband infrastructure such as fibre optic cables, this reduces the initial cost for broadband service providers to lay the infrastructure needed to provide broadband services, many states have already complied and reduced the rates to as low as 140 naira per meter, while some states have completely removed the charges.

Vice President Yemi Osinbajo SAN accompanied by Minister of Science and Technology, Dr. Ogbonnaya Onu; Senator Uche Ekwunife, and Minister of State Science and Technology, Mohammed Abdullahi, at the 2021 Tech & Innovation Expo at the Eagles Square, Abuja

 

“We are pursuing this cause because we recognize that internet access and broadband penetration are pillars of the innovation economy,” the President added.

The President expressed confidence that “through hard work and determination and by effectively harnessing our potential in science, technology and innovation, we will overcome the COVID-19 pandemic and build a nation that meets the aspirations of all our citizens and earns the respect of the world.”

He referenced the issuance of Executive Order No. 5 (“EO5”) in February 2018, as another demonstration of support and confidence in the Science and Technology sector by the administration especially in promoting domestic goods and services.

Earlier in his remarks, the Minister of Science and Technology, Dr Ogbonnaya Onu, acknowledged the support of the President and the commitment of the administration in enhancing the growth of Science and Technology in the country.

He expressed confidence that with improved funding for the sector, Nigerian researchers will proffer home-grown solutions to some of the challenges affecting the country.

Shortly after presenting awards to winners of the 774 Young Nigerian Scientists Presidential Award (774-YONSPA), the Vice President embarked on a tour of the exhibition pavilion in the company of Ministers of Science and Technology, Dr. Ogbonnaya Onu; Women Affairs and Social Development, Mrs. Pauline Tallen; Minister of State for Science and Technology, Mohammed Abdullahi; the Deputy Governor of Nasarawa State, Dr. Emmanuel Akabe, among other guests.

The 774-YONSPA award winners include Edeani Izuchukwu Godswill from Enugu State who won the first prize; Akinwande Oluwatomisin from Ondo State won the second prize, while Etukudoh Emmanuel Imeh from the FCT won the third prize.

FG Poised To Do Much More Through ESP – Presidency

Trader Moni: You Don't Need PVC For Loans, Presidency Says
Senior Special Assistant to Vice President Yemi Osinbajo on Media and Publicity, Mr Laolu Akande

 

The Presidency has said that Nigeria’s prompt exit from recession is a key indicator of the success of the ongoing Economic Sustainability Plan approved by the Federal Government.

This indication was given over the weekend by Mr. Laolu Akande, Senior Special Assistant to the President on Media and Publicity in the Office of the Vice President while updating the media on ESP progress and reacting to the latest GDP figures for the last quarter of 2020.

Mr. Akande said Nigerians should expect more as the implementation of the Plan is gathering even greater momentum.

“The President and the Federal Executive Council had approved the Plan last June and the Vice President was asked to lead the implementation of the Plan.

“The plan is aimed, among others, at preventing a deep recession and putting cash in the hands of Nigerians after the economic fallouts of the pandemic,” Akande stated.

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The VP’s spokesman noted that right from the 2020 third quarter, the economy was already on a rebound adding that the latest fourth-quarter figures show that indeed, the recovery of the Nigerian economy is a steady one.

“Like we explained late last year after the release of the third-quarter figures, the Economic Sustainability Plan, which was a calculated intervention by the Buhari Presidency, is driving the Nigerian economy in the right direction-upwards, and Nigerians can expect more because the administration is unrelenting in its determination to pursue the steady recovery and growth of our economy,” Akande noted.

The Presidential spokesperson said the Economic Sustainability Plan is entering into an even more potent phase with the revving up of plans to install 5 million solar installations across the country and the social mass housing plan that will result in hundreds of thousands of affordable houses for ordinary Nigerians. Both aspects he noted, will yield several hundreds of jobs besides giving the national economy a significant spur-like never before.

He explained that so far, the Survival Fund is making waves with MSMEs, artisans, transport workers, hundreds of thousands receiving cash stimulus, and the payroll support where an equal number of people running into hundreds of thousands employed by businesses are collecting N50,000 monthly, adding that the payroll support covers three months’ salaries for beneficiaries.

According to Mr. Akande, already about 311,000 employees have received the payroll support coming from 64,000 businesses nationwide and over 165,000 artisans have also benefited from the Survival Fund.

The spokesman further stated that in all, the Survival Fund is on course to safeguard at least a 1.3million jobs

Underway also, according to him, is the Government Off-take Scheme, GOS, where the Federal Government will pump an additional N15billion to support Nigerian-owned businesses by off-taking a number of products in a bid to keep businesses alive and create jobs.

The GOS are expected to cover products such as facemasks, liquid soaps, disinfectants, hand sanitizers, and other processed foods and spices. Altogether, the GOS will benefit 100,000 MSMEs, while an additional 100,000 Nigerians will also be benefiting from a one-off N50,000 MSME grant different from those already paid to artisans, transport workers and separate from the payroll support.

Commenting on the quarter 4 GDP figures, Akande quoting a Presidency review on the latest GDP figures, said that the Gross Domestic Product (GDP) grew by 0.11% in Q4 2020 following two consecutive quarters of negative growth, “showing an exit from the pandemic induced recession. This positive quarterly growth in Q4 2020 contributed to overall GDP, which contracted by -1.92% for the full year in 2020.”

“This GDP report is important for a number of reasons. It is a reflection of the growing importance of the non-oil sector, as its contribution to GDP has increased from 92.68% in Q4 2019 to 94.13% in Q4 2020. The non-oil sector performance was mainly driven by growth in Information and Communication, as the pandemic meant greater use of ICT services.

“Growth in Agriculture, Manufacturing, Mining, Construction, and Real Estate also contributed to the improvement of the non-oil sector.

The Presidency review noted that however “in contrast, the oil sector fell by -19.76% in Q4 2020 (6.36% in Q4 2019) as average oil production declined to 1.5 million barrels per day (1.5mbpd). This can be attributed to Nigeria’s compliance with OPEC+ quotas.”

It was observed that the “report indicates that Nigeria’s response to the COVID-19 induced shocks, the Economic Sustainability plan and the timely revision of the Federal Government budget, were effective.”

Besides, Akande explained that “the Nigerian Economy outperformed various analysts’ expectations like the IMF and World Bank. In addition, Nigeria’s quarter on quarter growth of 9.7% surpassed China (2.6%), USA (4%), and Japan (3%) despite these countries having larger stimulus packages.”

In conclusion, it was stated that “the Nigerian economy performed reasonably despite the earlier lockdown, trade disruptions, #EndSars protests, and oil price volatility. There is optimism as oil prices continue to stabilize, COVID-19 cases reach a plateau, success of an imminent vaccine rollout, and continued effective implementation of the Economic Sustainability Plan.”

COVID-19 Crisis Sinks Global Economy In 2020, Collapsing GDP 4.9% – IMF

In this file photo an exterior view of the building of the International Monetary Fund (IMF), with the IMG logo, is seen on March 27, 2020 in Washington, DC. Olivier DOULIERY / AFP
In this file photo an exterior view of the building of the International Monetary Fund (IMF), with the IMG logo, is seen on March 27, 2020 in Washington, DC. Olivier DOULIERY / AFP

 

The global coronavirus pandemic has sparked an economic “crisis like no other,” sending world GDP plunging 4.9 percent this year and wiping out $12 trillion over two years, the IMF said Wednesday.

Worldwide business shutdowns destroyed hundreds of millions of jobs, and major economies in Europe face double-digit collapses.

The prospects for recovery post-pandemic — like the forecasts themselves — are steeped in “pervasive uncertainty” given the unpredictable path of the virus, the IMF said in its updated World Economic Outlook.

“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the fund warned.

While businesses are reopening in many countries and China has seen a bigger rebound in activity than expected, a second wave of viral infections threatens the outlook, the report said.

World GDP is expected to rebound by just 5.4 percent in 2021, and only if all goes well, the IMF warned.

– Poor most vulnerable –

IMF chief economist Gita Gopinath said under current forecasts, the crisis will destroy $12 trillion over two years, and cautioned, “we are not out of the woods.”

“Substantial joint support from fiscal and monetary policy must continue for now,” Gopinath said in a blog post.

The downturn is particularly damaging for low-income countries and households, and threatens to endanger the progress made on reducing extreme poverty, the Washington-based crisis lender said in its report.

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The fund made drastic downward revisions to most of the April forecasts made in the early days of the pandemic, and IMF economists fear the coronavirus will leave lasting scars on employment, businesses and trade.

Hanging over the predictions is the bill for massive government stimulus plans, which were fueled by extremely low interest rates and likely prevented the recession from turning into a depression even as they created huge and ever-increasing debt levels.

– Drastic, downward revisions –

The damage is nonetheless stunning, and more widespread than any downturn in recent decades. The recession in many major economies will be more than double that suffered during the global financial crisis in 2009, which came as major developing economies like China, India and Brazil were booming.

China will eke out growth of one percent this year, the only positive figure on the long list of key economies the IMF tracks.

The United States will shrink eight percent and Germany slightly less, while France, Italy, Spain and Britain will suffer double-digit contractions. Japan makes out a bit better with a drop of just 5.8 percent, according to the forecasts.

Mexico also will see a double-digit decline while Brazil just misses that mark, as does Argentina, which is in the middle of a massive debt crunch on top of its health and economic crises after the country once again defaulted on its foreign obligations.

The IMF pointed to International Labour Organization data estimating more than 300 million jobs were lost in the second quarter of the year.

The “sizeable” flood of government funds to support workers and businesses “have forestalled worse near-term losses,” but the IMF urged countries to avoid a situation where aid is “prematurely withdrawn or improperly targeted” since that could worsen the economic damage.

“A more prolonged decline in activity could lead to further scarring, including from wider firm closures, as surviving firms hesitate to hire jobseekers after extended unemployment,” the fund warned.

– Trade hit, recovery weak –

With transport and manufacturing shut down for weeks, the IMF projects global trade volume will collapse by just under 12 percent — and advanced economies will see an even more dramatic drop.

The IMF also warned of dangers posed by eroding relations between and within countries.

“Beyond pandemic-related downside risks, escalating tensions between the United States and China on multiple fronts, frayed relationships among the Organization of the Petroleum Exporting Countries (OPEC+) coalition of oil producers and widespread social unrest pose additional challenges to the global economy,” the report said.

Trade disruptions could undermine productivity as firms shift supply chains to try to protect themselves against future breakdowns, and companies also face higher costs as they adopt enhanced cleaning procedures and social distancing requirements.

Amid the uncertainty, there is a chance the recession could be less severe than forecast, the report said.

“Downside risks, however, remain significant,” it warned.

AFP

Italy Faces Recession As Coronavirus Hits Economy

A resident wearing a protective respiratory mask speaks on his mobile phone in a street of Codogno, southeast of Milan, on February 22, 2020. An Italian man became the first European to die after being infected with the coronavirus on February 21, just hours after 10 towns in the country were locked down following a flurry of new cases. Miguel MEDINA / AFP

 

Italy’s economy performed woefully in 2019 and is set to do even worse this year due to the coronavirus, with the threat of recession looming large, experts said Monday.

“In the best scenario for Italy, we expect zero growth (in 2020) with a negative first quarter followed by a slow recovery,” OECD chief economist Laurence Boone said.

The economy expanded last year by just 0.3 percent — its worst figure since 2014, when gross domestic product (GDP) growth was zero.

Europe had fared badly across the board recently, weighed down by Brexit and US President Donald Trump’s protectionist threats.

But Italy, the third largest economy in the eurozone, has lagged well behind the bloc’s 1.2 percent growth.

The economy is traditionally export-driven and has been hit hard by global trade tensions, political uncertainty at home — two general elections in two years — and a slowdown in Europe, particularly in Germany.

Prime Minister Giuseppe Conte’s government has had some good news — the public deficit fell to 1.6 percent of GDP last year from 2.2 percent in 2018, while the debt ratio at least remained stable at 134.8 percent, well above the EU limit of 60 percent.

– Virus sinks recovery –

But just as Italy was expecting a gradual improvement in both growth and debt, the coronavirus epidemic struck.

The country is the worst-hit in Europe, with 1,694 positive cases and 34 deaths, one of the largest outbreaks outside Asia, according to figures published Sunday.

Wealthy Lombardy and Veneto, regions that alone account for some 30 percent of Italy’s GDP, have been hit hardest — with 11 towns between them forced into lockdown in a bid to contain the virus.

The government initially expected 0.6 percent growth in 2020, while the European Commission had forecast 0.5 percent.

But that was before the virus disrupted manufacturing supply chains, travel and tourism, with airlines cutting flights to northern Italy, trade fairs postponed, sports events cancelled and employees forced to work from home.

“After Italian GDP contracted sharply in fourth quarter of last year, the coronavirus outbreak spells the near-certainty of a renewed contraction in the first quarter that would leave Italy in a new recession,” says Oxford Economics expert Nicola Nobile.

Milan’s FTSE Mib initially slumped more than 3.0 percent Monday as anxiety over the virus continued unabated.

With businesses pleading for help, Italy Economy Minister Roberto Gualtieri announced a 3.6 billion euro support package — equivalent to 0.2 percent of the country’s GDP — to help the economy weather the storm.

AFP

Nigeria Records Highest Quarterly GDP Growth Since 2016 Recession

Source: NBS

 

 

The nation’s Gross Domestic Product (GDP) has recorded a growth of 2.55 per cent (year-on-year) in real terms in the fourth quarter of 2019, the highest since the recession in 2016.

This was revealed in the latest report released by the National Bureau of Statistics (NBS) and obtained by Channels Television on Monday.

The figure shows an increase of 0.17 per cent points compared to the fourth quarter of 2018 which recorded a growth rate of 2.38 per cent.

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According to the data agency, the GDP growth also represents an increase of 0.27 per cent points when compared with the third quarter of the year under review.

“The strong fourth quarter 2019 growth rate also represented the highest quarterly growth performance since the 2016 recession.

“Overall, this resulted in annual 2019 real growth rate of 2.27%, compared to 1.91% in 2018. Quarter on quarter, real GDP growth was 5.59%,” the report stated.

In the last quarter of 2019, the NBS said the nation’s aggregate GDP stood at N39,577,340.04 million in nominal terms.

It explained that this was higher than the fourth quarter of 2018 which recorded an aggregate of N35,230,607.63 million, representing year on year nominal growth rate of 12.34 per cent.

The agency stressed that the rate was –0.31 per points lower relative to the rate recorded in the fourth quarter of 2018, and –0.96 per cent points lower than the rate recorded in the preceding quarter.

IMF Cuts Nigeria’s 2020 Growth Forecast To Two Percent

 

The International Monetary Fund (IMF) has cut down its 2020 Gross Domestic Product (GDP) forecast for Nigeria to two percent, from the 2.5 per cent it had predicted earlier.

According to the IMF, the cut reflects the impact of lower international oil prices while inflation in the country is expected to pick up.

Data released by the National Bureau of Statistics (NBS) on Tuesday showed that Nigeria’s inflation for the month of January 2020 hit 12.13 percent, recording five months of consecutive rise.

A statement posted on IMF website on Monday said that the review was necessitated after its staff team led by Amine Mati, Senior Resident Representative and Mission Chief for Nigeria, visited Lagos and Abuja recently to conduct its annual Article IV Consultation discussions on Nigeria’s economy.

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Mr Mati stated that the pace of economic recovery remains slow, as declining real incomes and weak investment continues to weigh on economic activity.

“Inflation—driven by higher food prices—has risen, marking the end of the disinflationary trend seen in 2019. External vulnerabilities are increasing, reflecting a higher current account deficit and declining reserves that remain highly vulnerable to capital flow reversals. The exchange rate has remained stable, helped by steady sales of foreign exchange in various windows.

“Under current policies, the outlook is challenging. The mission’s growth forecast for 2020 was revised down to 2 percent to reflect the impact of lower international oil prices. Inflation is expected to pick up while deteriorating terms of trade and capital outflows will weaken the country’s external position,” the statement read in part.

The IMF lauded the Federal Government for taking a number of steps to boost revenue through the adoption of the Finance Bill and Deep Offshore Basin Act and improve budget execution by adopting the 2020 budget by end-December 2019.

However, it maintained that tightening of monetary policy in January 2020 through higher cash reserve requirements in a response to looming inflationary pressures is welcome.

“Major policy adjustments remain necessary to contain short-term vulnerabilities, build resilience, and unlock growth potential.

“Non-oil revenue mobilization—including through tax policy and administration improvements—remains urgent to ensure financing constraints are contained and the interest payments to revenue ratio sustainable.”

The mission reiterated its advice on ending direct central bank interventions, securitizing overdrafts to introduce longer-term government instruments to mop up excess liquidity and moving towards a uniform and more flexible exchange rate.

“Removing restrictions on access to foreign exchange for the 42 categories of imported goods would be needed to encourage long-term investment,” it stated.

Nigeria’s GDP Grows By 2.28% In Third Quater Of 2019

PHOTO CREDIT: National Bureau of Statistics

 

Data made available by the National Bureau of Statistics (NBS) shows that Nigeria’s gross domestic product (GDP) grew by 2.28% in the third quarter of 2019.

This is 0.17% percentage points higher than the 2.12% revised GDP growth recorded in the second quarter.

The GDP report which was released on Friday shows that the average daily oil production in the quarter was 2.04 million barrels per day (mbpd).

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According to the NBS, the growth rate in Q3 of 2019 represents the second-highest quarterly rate recorded since 2016.

The non-oil sector grew by 1.85% during the third quarter. The sector was driven mainly by the Information and Communication sector. Other drivers were agriculture, mining and quarrying, transportation and storage, and manufacturing. In real terms, the non-oil sector contributed 90.23% to the nation’s GDP.

The mining and quarrying sector grew by 5.98% in Q3 2019. Quarrying and other minerals exhibited the highest growth rate of all the sub-activities at 58.03%, followed by coal at 43.68%.

The agricultural sector grew by 14.88% in Q3 2019, showing a decline of –3.44% points from the same quarter of 2018.

The manufacturing sector in the third quarter of 2019 was recorded at 39.69%

Nigeria’s GDP Records Slow Growth In 2019 First Quarter

A figure showing Real GDP Growth between 2015-2019 first quarter/ Photo Credit: NBS

 

Nigeria’s Gross Domestic Product (GDP) has grown by 2.01% in the first quarter of 2019; this is according to figures released by the National Bureau of Statistics (NBS).

The slow growth is recorded in the first quarter after the oil sector contracted.

Compared to the first quarter of 2018, which recorded real GDP growth rate of 1.89%, the first quarter 2019 growth rate represented an increase of 0.12% points. However, relative to the preceding quarter (fourth quarter of 2018), real GDP growth rate declined by -0.38% points.

In the oil sector, -2.40% growth was recorded in first quarter of 2019. This indicated a decrease by -16.43% points relative to the rate recorded in the corresponding quarter of 2018.

This shows a growth decreased by -0.79% points when compared to Q4 2018 which was -1.62%.

 

The Mining and Quarrying sector grew by -2.31% in the first quarter of 2019. Compared to the first and last quarters of 2018, this represented a decline of -16.41% points and -1.07% points respectively.

Also, the agricultural sector grew by 3.17% in the first quarter of 2019, an increase of 0.17% points compared to the corresponding quarter of 2018, and 0.72% points compared to the preceding quarter.

Aggregate GDP stood at N31,794,085.85 million in nominal terms. This aggregate was higher than in the first quarter of 2018 which recorded N28,438,604.23 million, representing a year on year nominal growth rate of 11.80%.

The aggregate was, however, lower than in the preceding quarter of N35,230,607.63 million, by -9.75%.

According to the NBS, the 2019 general elections may have affected the economy’s performance.

It is also described the GDP performance as the strongest first-quarter performance observed since 2015.