Africa’s Largest Economy Suffers Worst Contraction in 10 Years
Nigeria’s Gross Domestic Product (GDP) in real terms declined by 6.10% (year-on-year) in Q2 2020, thereby ending the 3-year trend of low but positive real growth rates recorded since the 2016/17 recession.
This is according to the second quarter (Q2) GDP report, released by the National Bureau of Statistics (NBS) on Monday.
According to the numbers contained in the GDP report, the performance recorded in Q2 2020 represents a drop of 8.22% points when compared to Q2 2019 (2.12%), and 7.97% points decline when compared to Q1 2020 (1.87%).
As with most other economies around the world, the sharp drop in Nigeria’s GDP growth is largely due to the slowdown in economic activity after the country resorted to a lock-down back in April to curb the spread of the corona virus.
In the wake of the pandemic the World Bank forecast recorded a decline of 3.2% for 2020.which was a 5% point drop from its previous projections.
While the lock down has been eased in order to curb the economic crisis, the continued rise in cases especially in Lagos, Nigeria’s economic hub means the local economy is yet to fully re-open
As a result of the COVID-19 pandemic, there was a steep drop in oil prices amid a drop in global demand. This left Nigeria drastically cut of earnings given its dependence on the commodity as its biggest revenue source.
The latest economic data shows Nigeria’s government continues to fall far short of projections in its Economic Recovery and Growth Plan, allso showing that unemployment rate in Nigeria rose to 27.1% at the end of Q2 2020, as the impact Covid-19 pandemic significantly spread its impact across critical sectors.
While Nigeria has embarked on gradual easing of lockdown since Q2 2020 with a N2.3 trillion stimulus intervention, economic activities are yet fully peak, indicating a muted outlook in the remaining quarters of the year
The report of Nigeria’s economic contraction also come barely a week after a grim report on unemployment rates which showed 27.1% of Nigeria’s labor force (21.7 million Nigerians) are unemployed.