Africa’s largest economy was hit by a plunge in oil prices caused by a coronavirus pandemic and fell into a second recession in less than five years.
Nigeria’s crude oil production fell to its lowest level in four years, and GDP fell 3.6% in the three months to September, after falling 6.1% in the previous quarter, according to official data released Saturday. did.
The second consecutive quarter of economic contraction means that Africa’s largest oil producer has officially fallen into recession. Little has begun to recover from the recession following the 2015 oil price plunge.
The IMF predicts that the Nigerian economy will shrink 4.3% this year, which will be the biggest shrink in nearly 40 years.
More than half of Nigerians are unemployed or underemployed, with rising inflation and food prices.
The Central Bank of Nigeria will launch a two-day monetary policy meeting on Monday following a surprising 100 basis point cut in September aimed at strengthening the economy.
The economic situation remains dire. The private sector, which has to import almost all raw materials and equipment, is suffering from a dollar shortage, with oil production dropping from 1.81 million barrels in the previous quarter to 1.67 million barrels.
Gross revenue provides nearly 90% of Nigeria’s foreign exchange and about half of government revenue, despite the government’s need to increase funding for health care and social services in the face of a coronavirus pandemic. , It is decreasing.
The recession revived memories of 2016 when critics said that President Muhammadu Buhari’s administration exacerbated the economic downturn caused by the oil crash through policies such as maintaining multiple exchange rates.
This year, the central bank took further steps to unify the exchange rate, devaluing naira by 20%, showing the move that the World Bank, the IMF, and many economists have long encouraged.
The government has also taken steps to take advantage of the crisis caused by the pandemic to enact a series of significant reforms that have long been seen as essential to promoting sustainable growth.
This includes accelerating major oil industry reforms underway over 20 years, reducing expensive fuel subsidies that cost the government billions of dollars each year, raising VAT, and making the electricity sector uneconomical. Includes price revisions.
Nigeria falls into a recession when Covid bites.
Source link Nigeria falls into a recession when Covid bites.