Federal Government has expressed optimism that the nation’s economic outlook remained bright, irrespective of the contraction in the GDP growth rate recorded in the last quarter.
Several Nigerians have expressed disgust over the scary report rolled out confirmed that the country’s economy has slipped into recession.
Adeyemi Dipeolu, Special Adviser to the President, Economic Matters however assured that the recession would be short-lived, assuring Nigerians that many of the challenges faced in the first half either no longer existed or had begun to ease.
He noted that the data released by the NBS on the GDP growth rate, while confirming a temporary decline, also indicated hopeful expectations for the country’s economic trajectory.
According to NBS’ report, Nigeria officially slipped into a recession based on NBS’ GDP growth figures for Q2 2016, which showed that the economy contracted by 2.06 per cent, compared to the negative growth of 0.36 per cent recorded in Q1 2016.
Also, the increase in food prices and imported items pushed up the Consumer Price Index (CPI), which measures inflation, to 17.1 per cent in July, from 16.5 per cent in the month of June.
National unemployment rate also rose to 13.3 percent in Q2 from 12.1 in Q1 2016, 10.4 percent in Q4 2015, 9.9 percent in Q3 2015, and from 8.2 percent in Q2 2015.
However, labour productivity increased by 5.3 percent to N637.5 in Q2 2016, from N605.27 in the previous quarter.
Nigeria’s Q2 GDP declined by -2.06 percent year-on-year in real terms, lower by 1.70 percent from the growth rate of –0.36 percent recorded in the preceding quarter, and also lower by 4.41 percent compared to 2.35 percent recorded in the corresponding quarter of 2015.
Quarter-on-quarter, real GDP increased by 0.82 percent. But in normal terms, the GDP in Q2 stood at N23.48 trillion at basic prices, 2.73 percent higher than estimates in Q2 2015 of N22.85 trillion and lower than the rate recorded in Q2 2015 by 2.44 percent.
Daily oil production was estimated at 1.69 million barrels per day (mbpd), representing 0.42mbpd lower than Q1 production of 2.11mbpd and also lower than the corresponding quarter in 2015 by 0.36mbpd when output was recorded at 2.05mbpd.
The non-oil sector declined by 0.38 percent in real terms in Q2, representing a growth rate of 0.20 percent, which was lower than Q1 2016 estimate of -0.18 percent, and 3.84 percent lower from the corresponding quarter in 2015 of 3.46 percent.
In real terms, the non-oil sector contributed 91.74 percent to the nation’s GDP, but contracted by 0.38 percent in the quarter under review.
On the spike in inflation, energy and energy-related prices recorded the largest increases reflected in the core sub-index in the July inflation figure. The core sub-index increased by 16.9 percent during the month, up by 0.7 percentage points from 16.2 percent.
The highest increases were seen in the electricity, liquid fuel (kerosene), solid fuels, and fuels and lubricants for personal transport equipment groups.
Also, in the unemployment report for Q2 2016, the NBS said the nation’s labour force population – those within the working age population willing, able and actively looking for work – increased to 79.9 million from 78.5 million in Q1 2016, representing an increase of 1.78 percent in the labour force during the quarter.
The economically active population or working age population – persons within the ages of 15 and 64 – increased to 106.69 million in Q2 from 106 million in Q1, representing a 0.65 percent rise over the previous quarter and a 3.02 percent increase when compared to Q2 2015.
According to the NBS, the number of the unemployed in the labour force, increased by 1,158,700 persons, resulting in an increase in the national unemployment rate, while 26.06 million Nigerians were either unemployed or underemployed, compared to 24.5 million in Q1 and 22.6 million in Q4 2015.
Also, the total number of jobs added to the economy in Q1 2016 fell to 79,469 jobs, representing a sharp decline of 83.1 per cent (389,605) year-on-year and 84.1 percent (420,056) from the previous quarter.
The NBS noted that the sharp decline in employment generation was strongly correlated to the weakening economic output within that period, where the Nigerian economy recorded a negative growth of -0.36 per cent.
It said of the 79,469 jobs created, 21,477 were in the formal sector and 61,026 in the informal sector. The public sector recorded a negative figure of -3.038 percent in new jobs created within the period in review.
The NBC also released its report on Nigeria’s foreign capital importation for Q2 2016, showing that it dropped by 8.98 percent to $647.1 million, compared to $710 million in the previous quarter.
It was the second consecutive quarter to witness record-low levels of foreign capital importation into the economy and also the largest year-on-year decrease.
According to the Foreign Capital Importation report for Q2, which was released by the NBS yesterday, portfolio investments recorded the largest decline of 88.76 percent year-on-year, compared with declines of 37.00 percent and 1.22 percent for Foreign Direct and Other investments, respectively.
“Compared to the previous quarter, however, FDI recorded the largest decline of 23.75 percent, compared with a decline of 9.49 percent for portfolio investment and an increase of 1.24 percent for other investments.
“As a result of these changes, other investments replaced portfolio as the largest component of capital importation, and accounted for 41.53 percent, compared with shares of 37.91 percent and 20.56 percent for portfolio and FDI.
“In the same quarter of the previous year, portfolio investment accounted for 81.88 percent of total investment, which highlights the fact that portfolio investment has been the hardest hit by recent economic events.
“This is possibly due to portfolio investment having a shorter term focus than other investment types,” the NBS stated.
However, other investments were the largest component of imported capital and accounted for $268.77 million or 41.53 percent.
This was despite the fact that only one type of other investment was recorded during the quarter: Other Investment Loans.
The second largest component was portfolio investment, which accounted for $245.32 million, or 37.91 percent.
Portfolio investment was dominated by equities, which accounted for 83.18 percent, a slightly lower share than the year before (when the share was 84.56 percent), but higher than in the previous quarter when it accounted for 74.41 percent.
Despite the overall fall in portfolio investment of 9.49 percent, portfolio equity investment increased by 1.18 percent. The bulk of the fall was accounted for by portfolio money investment, which fell by $26.60 million, or 39.20 percent, although investment in bonds fell to zero from $1.50 million in the previous quarter, and from $50.54 million in the second quarter of 2015.
The decline to zero in capital imported in the form of bonds was particularly striking when compared to the high of $1,000.28 million recorded in the third quarter of 2014, at which time Nigeria was included in the JP Morgan Emerging Markets Bond Index, the NBS noted.