GDP fall expected, says analysts

Analysts have stated that it was not surprising that the country’s Gross Domestic Product (GDP) dipped by 1.61 per cent from growth recorded in the first quarter of the year.

They claimed that judging the performance of country’s economy in the last three months, it was expected that the GDP would definitely decline.

The National Bureau of Statistics (NBS) GDP Q2 2015 report released late on Tuesday showed that the country’s GDP growth dropped to 2.35 percent from 6.54 percent a year earlier, but went down 1.61 per cent between Q2 and Q1, 2015.

The nation’s economic growth also declined by 4.19 per cent in Q2 2015 when compared with the corresponding period in 2014; however, QoQ the real GDP went up by 2.57 per cent.

NBS attributed the fall in the GDP to drop in oil production, which slipped to 2.05 million barrels per day from 2.21 million during this period at below $50 per barrel.

Dr. Boniface Chizea, Managing Director, BIC Consultancy Services Limited, opined that a close look at what have happened to oil price, exchange rate and the prohibition of 41 items from the official forex market, it was evident that the country’s economy would suffer some setbacks.

“If you look at all these challenges, then it was not surprising that the GDP fell. It will even get worse before it gets better,” he submitted.

He stressed that the present situation is a pointer that fiscal policies have to be introduced to address this ugly trend, as monetary policies alone cannot stabilize the economy.

“There is an urgent need for the President to come out with his policies and keep going. So the fiscal policies would complement the monetary policies. There is a limit to which monetary policies can go,” he elaborated.

Another Economist who spoke with Hallmark said he expected the fall in the GDP, because of the continued fall of oil crude prices, since oil remains the main stay of the country’s economy.

The report indicated that growth of the oil sector slowed by 6.79 per cent % (year-on-year) in Q2 2015.

“This represents a decline relative to growth recorded in Q2 2014 (5.14% ).

Growth was however relatively better by 1.35% points relative to growth in Q1 of 2015.

Quarter-on-Quarter, growth also slowed by 3.82,” it said

During the Q2 2015, the oil sector represented 9.80 per cent of total real GDP, down from the shares recorded in the corresponding period of 2014 and the share in Q1 2015 by 0.96 per cent points and 0.65 per cent points respectively.

“During the quarter, aggregate GDP stood at N22,859,153.01million (in nominal terms) at basic prices. Compared to the Second Quarter 2014 value of N21,734,829.86 million, nominal GDP was 5.17% higher.

Nominal GDP growth was also higher relative to growth recorded in Q1 2015 by 0.85% points. The Nigerian economy can be more clearly understood according to the oil and non-oil sector classifications,” the NBS report stated.

The report added that growth lowered by 3.82 percentage points, with the oil sector’s share of the economy accounting for about 9.8 percent total real GDP, down from the shares recorded in the corresponding period of 2014.

It also showed that the non-oil sector grew by 3.46 per cent in real terms, due to the activities in Trade, Crop Production, Construction and Telecommunications.

On the other hand, growth in the non-oil sector was down by 2.13 per cent and 3.26 percent when compared with the first quarter and corresponding quarter in 2014 respectively.