No indication that Nigerian economy would recover soon, says analysts

Following the latest data released by the National Bureau of Statistics (NBS), which showed that the Nigeria’s Gross Domestic Product (GDP) has contracted by 2.06 per cent in the second quarter of 2016, analysts have expressed their concern that there is no indication that the country’s economy would rebound any time soon, despite assurances from government cycles that they are working assiduously to reverse the trend.

Finance Minister, Mrs Kemi Adeosun had stated last week, “I believe this economy will turn around in no distant time. I know people are concerned about recession.

“We can come out of a recession as soon as possible by sticking to the prescription which is, we must be disciplined in our expenditure…

“We must invest in our capital and we must diversify our economy.”

However, Dr Vincent Nwani, Director, Policy and Advocacy, the Lagos Chamber of Commerce and Industry (LCCI), believes there is nothing to support the minister’s optimism.

According to him, the current recession demonstrates the extent to which Nigerians have been impoverished and the degree of hopelessness in the country.

“With inflation increasing to 17.1 per cent in July, it means real wages have fallen further and there is more poverty in the country,” he noted.

Dr Nwani said Nigerians are waiting to see what the government would do to change the ugly trend.

“Recession is not a permanent phenomenon. Countries have entered recession and they came out. But the economic agents are waiting to see what the government is actually doing, because we need to move from promises to action.

“There is nothing on ground that we who are monitoring the economy can see that gives us assurance that Nigeria would soon navigate out of recession,” he added.

The economist opined that the economic policies of the present administration is still very worrisome, “fragmented and something you cannot hold on to.”

He asserted that to reflate the economy, government needs to go beyond spending money, but engage in continuous policy implementations and sector by sector reform.

The NBS’ recent data indicated that the country’s Consumer Price Index (CPI) increased to 17.1 per cent in July from 16.5 per cent in June.

Renowned lawyer, Mr Olisa Agbakoba, also argued last week that it would take soon while before the country would overcome the present recession.

He noted that recession often has a lifecycle.

Mr Olusola Ayodele, Economist, Nigeria Employers Consultative Association (NECA), stated that the latest figures from NBS confirm that the country is in full recession.

“From all indications, until the end of this year and even first quarter of next year, we would still be having negative growth,” he stated.

He postulated that to revive the country’s economy, government must increase liquidity in the system through increased capital spending.

Ayodele added that the government must find way of stimulating the economy urgently.

The NBS report showed increases were recorded in all `COICOP divisions’ which contributed to the Headline index reflecting higher prices across the economy.

The pace of the increase in the headline index was however weighed upon by a slower increase in three divisions; Health, Transport, and Recreation and Culture divisions.

It stated that the onset of the harvest season is yet to have a significant impact on food prices.

“It is yet to have a significant impact as the Food Sub-index increased by 15.8 per cent (year-on-year) in July, 0.5 per cent points lower from rates recorded in June.

“Prices however increased at a slower pace across a few groups within the Food sub-index namely Milk, Cheese and Eggs; Oils and Fats; and Fruits,” it said.

The report added that imported foods as reflected by the Imported Food Sub-index increased by 0.4 per cent points from June to 20.5 per cent in July. It stated that Energy and energy related prices continued to be the largest increases reflected in the Core sub-index.

“In July, the Core sub-index increased by 16.9 per cent during the month, up by 0.7 per cent points from rates recorded in June (16.2 per cent).

“During the month, the highest increases were seen in the Electricity, Liquid Fuel (kerosene), Solid Fuels, and “Fuels and Lubricants for Personal Transport Equipment” groups,” the report stated.

It showed that month-on-month, the Headline index increased albeit, at a slower pace for the second consecutive month in July.

“The index increased by 1.3 per cent in July, 0.4 per cent points from 1.7 per cent recorded in June,” the report stated. News Agency of Nigeria reports that the inflation rose for the ninth consecutive month in July.”