#BounceExclusive: What Nigeria’s Exit From Recession Means For Nigerians
So, Nigeria is currently abuzz with the news of its economy’s exit from recession.
The National Bureau of Statistics, NBS reports on GDP growth for the second quarter of 2017 has shown that the economy recorded a marginal growth of 0.55%.
This is after 5 consecutive quarters of negative growth.
To understand what this means for the economy, it is important to understand the factors that led the 0.55% growth.
There are two sectors that led the growth, the oil and non-oil sectors.
Also Read: BREAKING: Nigeria Out Of Recession
During the period under review, Nigeria’s oil production improved significantly, because of government’s peace efforts in the Niger Delta, which made the militants halt hostilities on oil production facilities in the region.
Based on these, between April and June, oil production was estimated to have averaged at 1.84 million barrels per day, 0.15 million barrels higher than the daily average production recorded in the first quarter of 2017.
This led to quarter-on-quarter growth of the oil sector by 7.52% in the second quarter of 2017, up from figures recorded in the corresponding period of 2016 and up from the preceding quarter, where it contributed 8.79% and 8.53% respectively.
Luckily for Nigeria, this was just the same period that oil prices picked up, rising from about $40 per barrel to about $50 per barrel.
The non-oil sector on the other hand accounted for greater percentage of the GDP growth, at 91.11%.
According to NBS, although the non-oil sector’s contribution to GDP was lower compared to Q1 2017, the sector grew by 0.42% in real terms during the period under review.
This means two things for the economy.
First, for Nigeria’s economy to heave a long sigh of relief from recession, it must seek favourable long term oil production output since the government depends on it for most of its revenue.
The stability of the oil price will also determine how long Nigeria stays out of recession.
Read More: Nigeria’s Economy Still In Bad Shape - IMF
Second, the improvement in non-oil contribution to agriculture is good news but a more pragmatic approach to a reasonable level of sufficiency with an eye on export is what will bail the country out of economic regression.
It is also important to understand that the economy’s exit from recession does not immediately translate into immediate improvement in standard of living.
Food inflation may continue to go up and with foreign exchange scarcity and increasing import bill, a positive economic growth now is at best only on paper.
Over time, however, the impact may be felt by the people if the growth is sustained.
In the meantime, it would be as IMF predicted when some of its staff visited Nigeria recently, that even though there would be growth, it would be so insignificant that no one would notice.
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