Recession is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
The fears of Nigerians have been confirmed by the National Bureau of Statistics (NBS) as it today released the Nigerian Gross Domestic Product (GDP) Report Q2 2016. According to the statistics bureau, Nigeria’s GDP declined by -2.06 percent (year-on-year) in real terms. This was lower by 1.70 percent points from the growth rate of –0.36 percent recorded in the first quarter of 2016. It is also lower by 4.41% points from the growth rate of 2.35% recorded in the corresponding quarter of 2015.
The report stated that quarter on quarter, real GDP increased by 0.82 percent. Nominal GDP was N23, 483,954.78 million (in nominal terms) at basic prices during the second quarter. This was 2.73 percent higher than the Second Quarter 2015 value of N22,859,153.01 million.
With multiple attacks by militant groups in the Niger Delta, oil production during the second quarter dropped to an estimated 1.69million barrels per day (mbpd), 0.42 million barrels per day lower from production in First Quarter of 2016. As a result, real growth in the oil sector was negative 17.48 percent (year-on-year) in the Second Quarter of 2016. As a share of the economy, the oil sector contributed 8.26 percent to total real GDP, down from the contribution recorded in the corresponding period of 2015 and the First Quarter of 2016 by 1.54 percent points and 2.03 percent points respectively.
The non-oil sector did not make a significant difference as it is substantially indirectly dependent on the oil sector. It, therefore, declined by 0.38 percent in real terms in the Second Quarter of 2016. This growth rate was 0.20 percent points lower than the First Quarter of 2016 (-0.18%), and 3.84% points lower from the corresponding quarter in 2015 (3.46%). However, the Non-Oil sector contributed 91.74 percent to Nigeria’s, higher from shares recorded in the First Quarter of 2016 (89.71%) and the Second Quarter of 2015 (90.20%).
The National Bureau of Statistics also stated that headline Inflation in July 2016 rose year on year to 17.1 percent from 16.5 percent in June.
Foreign Direct Invest declined from $211.1m in Q2 2015 and $174.4m in Q1 2016 to an estimated $133.0m in Q2 2016.
Output in Africa’s most populous nation is weighed down by low oil production and prices, as well as a shortage of foreign currency after the central bank held a Naira peg for more than a year. The International Monetary Fund (IMF) said in July, that the west African country would see its economy shrink by 1.8 percent in 2016. With the second quarter economic performance worse than the first quarter and no clear policies to arrest the situation, it is safe to say that Nigeria will by the end of the year record its first full-year recession since 1987.
Download full Q2 GDP report here.