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.

READ ALSO: Millions Of Migrant Workers Head Home Due To Coronavirus – UN

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.

READ ALSO: El-Zakzaky, Wife Unfit To Stand Trial, Court Rules

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.

READ ALSO: No Govt Financial Transaction Will Be Done In Secret, Says Buhari

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).

READ ALSO: Inflation Rate Rises To 11.61% In October

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.

New GDP Figures By NBS An Indication Of Effective Economic Policies – Presidency

 

The Federal Government has described the latest Gross Domestic Product figures of 2.38 per cent for the fourth quarter of 2018, released by the National Bureau of Statistics, as encouraging.

In a statement issued on Tuesday, the Special Adviser to the President on Economic Matters in the office of the Vice President, Dr. Adeyemi Dipeolu, said it was a clear indication of the effectiveness of the economic policies of the Buhari presidency.

Explaining the growth, Dr. Dipeolu said, “Notably, the growth recorded in the fourth quarter of 2018 (Q4 2018) was higher than both the growth of 1.81% in Q3 2018 and in the corresponding fourth quarter of 2017. Indeed, quarter-on-quarter growth from Q3 2018 to Q4 2018 was 5.31%, which signals a great potential for a higher annual growth rate.

Read Also: Nigeria’s GDP Grows 2.38 Per Cent In Fourth Quarter Of 2018

He attributed the growth in Q4 2018, largely to the performance of the non-oil sector.

“The non-oil sector grew at 2.7% in Q4 2018 as compared to 1.14% in the oil sector. The non-oil sector also grew by 2% in the whole year 2018 which was considerably better than its growth in the whole of 2017, which was 0.47%.

“The share of the non-oil sector in GDP was 92.94% while the oil sector contributed 7.06%,” Dipeolu stated.

He expressed optimism that if this trend was maintained, the economic diversification objectives of the Economic Recovery and Growth Plan (ERGP) would well be on their way to being met.

“It was encouraging that agriculture which accounts for 26.15% of total GDP grew by 2.46% in Q4 2018, while manufacturing grew by 2.09%. The service sector which accounts for 53.62% of GDP registered its strongest growth performance in 11 quarters,” he said.

Also notable were transport and storage, as well and information and communication, which grew at 13.91% and 9.65% in the whole of 2018, owing to the investments being made in infrastructure development such as roads and broadband.

According to Dipeolu, the Buhari administration will diligently pursue the ERGP for continued improvement in the nation’s economic conditions.

The NBS on Tuesday released the GDP figures for the last quarter of 2018, indicating what the Federal Government described as showing a marked improvement in the growth performance of the economy.

Nigeria’s GDP Grows 2.38 Per Cent In Fourth Quarter Of 2018

 

Nigeria’s GDP has grown 2.38 per cent in real terms within the fourth quarter of 2018, showing a 0.27 per cent jump over the fourth quarter of 2017.

The Real GDP growth posted 5.31 per cent on a quarter-on-quarter basis, with an annual growth rate of 1.93 per cent printed for the fiscal year of 2018.

READ ALSONigeria’s GDP Slowed In Second Quarter Of 2018

While the aggregate nominal GDP was at NGN 35.230bn, a higher 12.65 per cent from NGN 31.275bn recorded in the fourth quarter of 2017.

Nigeria’s nominal GDP for the fiscal year of 2018 was at NGN127.76bn, posting a nominal growth rate of 12.36 per cent above the fiscal year of 2017 level of NGN 113.71bn

FEC Pleased As Budget Minister Reveals 2018 GDP Growth

 

The Federal Executive Council on Wednesday received a report detailing the growth of the nation’s GDP in the third quarter of 2018.

After the meeting presided over by President Muhammadu Buhari, the Minister of Budget and National Planning, Udo Udoma, told journalists that the council was encouraged by the economy’s steady recovery from recession.

He also noted that the economic growth continues to be driven by the non-oil sector which grew by 3.32 per cent in the third quarter.

Read Also: Significant Growth In Non-Oil Sector Is Creating Thousands Of Jobs – Buhari

The nation had entered into a recession in 2016, according to statistics by the National Bureau of Statistics (NBS).

Consequently, the cost of basic amenities soared, as the value of the naira depreciated compared to the dollar – a situation which caused hardship for the majority of Nigerians.

With pressure being mounted on government, the need to diversify the economy and focus on the non-oil sector became inevitable.

After various efforts, the nation exited the recession in 2017.

The presidency, however, promised that it won’t rest until the impact of the nation’s new economic status is being felt by all Nigerians.


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Nigeria’s Environment Minister, Ibrahim Jibrin Resigns


 

Meanwhile, the Minister of State for Environment, Ibrahim Jibrin, has resigned from the federal cabinet.

His resignation was announced during the FEC meeting on Wednesday, after which a valedictory session was held in his honour.

No-Deal Brexit Could Cost UK Economy 9.3% Of GDP – Govt

European Union, Ogbonnaya Onu, Science and technology

 

If Britain crashes out of the EU without a deal its economy could end up being 9.3 percent smaller in 15 years’ time than would otherwise be the case, the government said on Wednesday.

A cross-departmental analysis found leaving the EU will leave Britain poorer than it would have been had it remained inside the bloc, even accounting for new trade deals it would eventually be able to sign.

It did not exactly the model for the deal struck by Prime Minister Theresa May with the EU last week, the outlines of which remain vague, but suggests something similar could see the economy shrink by as much as 3.9 percent.

The 83-page report was published a fortnight before British MPs vote on the deal, with many deeply opposed.

The Brexit deal comprises a divorce agreement and a political declaration on future ties, which offers a “spectrum” of options for how Britain will trade with the EU after Brexit, the report said.

Given this range of options, the economic analysis offered two different models on what the final deal could look like and assessed how they could affect the economy when combined with the government’s hopes of ending free moment of EU workers into Britain.

If Britain got the frictionless trade it wants, as outlined in a government plan in July, and there was no change to migration arrangements, the economy would still shrink by 0.6 percent compared to what it would be otherwise.

If Britain did get frictionless trade and net EEA migration fell to zero, the economy would shrink by 2.5 percent.

But many believe Britain will not get everything it wants, and the analysis models a trade arrangement halfway between frictionless trade and a standard free trade agreement.

This compromise model with no change to migration would see the economy shrink by 2.1 percent. With zero net migration, it would shrink by 3.9 percent.

The document makes clear the paper is not an economic forecast for the UK economy, adding that the results “should be interpreted with caution”.

The models also do not take into account changes such as demography or productivity levels, or any changes to EU rules in the future.

They do however assume Britain rolls over the trade deals it currently benefits from as part of the EU and strikes new ones with countries including the United States.

But the impact of these trade deals is negligible — and the increase of between 0.1 and 0.2 percent in GDP compared to today’s arrangements.

AFP

Q2 GDP: Analysts Unhappy With Performance Of Agriculture, Manufacturing Sectors

 

The Gross Domestic Product (GDP) report released on Monday by the National Bureau of Statistics (NBS) has left some analysts concerned about some sectors, especially the agriculture and manufacturing sectors.

The report for Q2 2018 showed that GDP slowed, growing by 1.50% in the second quarter as against the 1.95% growth in the first quarter of 2018.

Chief Executive Officer Of Cowry Asset Management, Mr Johnson Chukwu, told Channels Television’s on Channels Television programme, Business Morning said although the GDP Q2 report shows positive growth, the key sectors, however, did not perform positively.

“Although the GDP grew positively by 1.95%, the sectors that should propel job creation and economic positive are not in the positive directory,” Chief Executive Officer of Cowry Asset Management, Mr Johnson Chukwu, said on Monday in an interview on Channels Television’s on Business Morning.

“Manufacturing sector compared to the first quarter had a major contraction in terms of growth rate,” he said.

Chukwu explained that although the agriculture sector is growing in Nigeria, it is also doing so at a much slower pace. The economist blamed this on the crisis in north-central Nigeria.

He said, “(The) Agricultural sector grew by only 1.19% in the second quarter. I have also said the impact of the crisis in the Northcentral will reflect on the GDP growth status. The Manufacturing sector accounts for 9.28 in the GDP. So these key sectors are not growing.”

Another analyst, Mr Rotimi Fakayejo said the figures from the report are not unexpected but show hope ahead, but, like Chukwu, he flagged the performance of the agriculture sector.

He also expects investors to be concerned about the performance, noting, however, that not many companies in the sector are listed on the Nigerian Stock Exchange.

“I believe investors may not be able to miss out on the grey points of their investment in terms of what kind of returns they are going to get,” he said.

“So, I believe strongly that with the way it is now, the agricultural sector will draw the ire of investors and that is going to be a major focus.”

The GDP report released on Monday showed that the Agriculture sector – Crop Production, Livestock, Forestry and Fishing – contributed 18.78% to nominal GDP but the growth in the second quarter was lower than the rate recorded for the second quarter of 2017 (19.28%).

Nigeria’s GDP Grows In First Quarter Of 2018

 

Nigeria’s real Gross Domestic Product (GDP) grew year-on-year to 1.95 percent in the first quarter of 2018.

According to the National Bureau of Statistics, the performance represents a stronger growth compared with the first quarter of 2017, indicating an increase of 2.87 percentage points.

Compared to the preceding quarter, however, the GDP fell 0.16 percent points from 2.11 percent.

In nominal terms, aggregate GDP stood at 28.46 billion naira, higher in performance when compared to the 26.02 billion naira recorded in the first quarter of 2017

The statistics bureau says the GDP number presents a positive year on year nominal growth rate of 9.36 percent.