The crash in oil prices coupled with the Covid-19 pandemic has pushed Nigeria’s economy in the worst recession for at least a decade. Statistics from the country’s National Bureau of Statistics published on Monday, August 24, indicate that Gross domestic product shrank by 6.1 per cent in the three months through June from a year earlier, compared with growth of 1.87 per cent in the previous quarter. Oil production fell to 1.81 million barrels compared to 2.07 million barrels in the previous three months. That’s the lowest since the first quarter of 2017, which was the last time Africa’s largest economy contracted. While crude contributes less than 10 per cent to Nigeria’s GDP, it accounts for about 90 per cent of foreign-exchange earnings and half of government’s revenue. This means the plunge in oil prices in the wake of the coronavirus pandemic, which hit economic recovery from the 2016 slump was still gaining traction. The statistics further reveal the drop in output was wider than just crude. The oil sector contracted by 6.6 per cent from a year earlier and the non-oil sector shrank by 6.05 per cent, the first decline in non-oil GDP since the third quarter of 2017. “The decline was largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the Covid-19 pandemic,” the statistics office told the media. This comes at a time when the International Monetary Fund predicts Nigerian GDP to shrink by 5.4 per cent this year, its biggest contraction in nearly 40 years. “Macro headwinds -- depressed oil prices, a slow pickup in global trade, a strong dollar supported by the Fed -- along with local structural inefficiencies, will continue to batter the Nigerian economy,” Ikemesit Effiong, Head of Research at Lagos-based SBM Intelligence, told Bloomberg before the release.
