Nigeria’s economy, Africa’s second largest, shrunk for the second straight quarter in the three month to end of June officially cementing the country’s first recession in over two decades, figures from the nation’s statistics office showed on Wednesday.
Data released by the Nigeria Bureau of Statistics indicated that the country’s gross domestic product (GDP) contracted by 2.06 percent in the second quarter of this year confirming that the West African oil producer was now in a recession, Africa News reported.
A country is usually said to be in a recession if its economic growth declines for two successive quarters.
In July, Nigeria’s Finance Minister Kemi Adeosun said the West African nation was officially in a recession but she did not expect it to last long and people should dwell more on the measures taken by the government to revive the economy.
The West African nation recorded its first contraction in the economy in over 12 years the first quarter of 2016, as low global oil prices hurt government revenue and affected other key sectors including manufacturing, financials and real estate.
The country, which was recently overtaken by South Africa as the continent’s largest economy, has been facing tough financial times since last year after oil prices, its main export commodity, plunged.
Crude export accounts for over 70 percent of the country’s budget.
Economists who were expecting the country to grow by 1.8 percent year-over-year, according to a Bloomberg consensus, have re-evaluated their projections for the year, which is likely to be the worst in more than a decade.
“The Nigerian economy contracted more deeply than we had expected in the second quarter,” Razia Khan, chief economist, Africa at Standard Chartered bank, told Reuters.
African Development Bank (AfDB) has however projected a real GDP growth rate of 3.8 percent for Nigeria by the end of this year and further expects it to grow by 5 percent in 2017 mainly due to “expansionary” reforms instituted by the federal government.
The AfDB made the projections in its Africa Economic Outlook report launched during its annual meeting that opened in Lusaka, Zambia in July.
It said the Nigerian economy had been adversely affected by external shocks, in particular a fall in the global price of crude oil, which are slowly improving in 2016.
“Nigeria has had sluggish economic growth since the end of 2015 with the rate dropping to an estimated three per cent in December 2015, leading the authorities to adopt an expansionary 2016 budget that aims to stimulate the economy,” the bank said.
Figures from NBS also showed foreign direct investment to the country had plunged 76 percent in the second quarter of this year, compared to the same period last year.
Capital Economists said in May that foreign exchange restrictions had made it difficult for investors to repatriate their earnings from the West African nation causing the fall in inflows.
Nigeria is also struggling with a deteriorating security situation with frequent attacks on civilians by Islamic group Boko Haram and recently there has been a flare up of attacks in the South Eastern state of Enugu, carried out by Fulani Pastoralists from the North.
