Nigeria’s economy is projected to contract in the second quarter of 2020 due to the six weeks lockdown on some parts of the country, Nigeria Employers’ Consultative Association (NECA) has said.
In a statement reacting to the latest Q1 2020 Gross Domestic Product (GDP) report released by National Bureau of Statistics (NBS) which said that Nigeria’s economy grew by 1.87%, NECA said the real impact of COVID-19 on the economy would be felt in the Q2 GDP result due to the commencement of the lockdown in April.
It stated that the slowdown in the GDP growth reflects the earliest effects of the disruptions on non-oil economy, coupled with an escalating war of words between the U.S. and China which resulted into low demand in global oil.
The lockdown of the Nigerian economy commenced in April due to the pandemic, therefore, the real impact of COVID-19 on the economy would be felt in the Q2 GDP result. We applaud the managers of the economy, as the economy grew faster than expected in the first quarter because of a boost in oil production.
“We anticipate contraction in the second quarter, as the economy witnessed a 6week’s lockdown on the commercial nerves of the country, and similar trend witnessed in global economy, except China, whose consumption of fuel due to opening of industrial hubs and transportation could portends mild positive growth pattern due to demand for crude oil.”
The employers association called for more fiscal and monetary policies aimed at boosting non-oil sector to help salvage the economy from external shocks.
“There is the need for the Fiscal and Monetary authorities to develop a more aggressive and decisive policies to sustain an economic recovery in the wake of further low oil prices. We believe that a more coordinated stimulus packages targeted at the worst-hit sectors of the economy would sustain the economy from experiencing contraction of 8.9% as predicted.”
Nigeria’s non-oil sector grew by 1.55% in real terms in the first quarter of 2020, but was slower by –0.93% point’s year on year.
The growth in the non-oil sector was mainly driven by “Information and Communication (Telecommunications), Financial and Insurance (Financial Institutions), Agriculture (Crop Production), Mining and Quarrying (Crude Petroleum & Natural Gas), and Construction”.
But it still accounted for the major contribution to the nation’s GDP in the first quarter of 2020 by 90.50%, less than its share in the first quarter of 2019 which was 90.78% and the fourth quarter of 2019 recorded as 92.68%.