Three years after the 2016 financial crisis, Nigeria has finally entered into another recession. In two consecutive quarters – Q2 and Q3 – the country’s Gross Domestic Product negotiated twice to push the financial system into its worst recession.
Real GDP contracted by -3.62% in Q3 (July to September) of this year for the second consecutive quarter,
according to a report obtained from the Nigerian Bureau of Statistics (NBS), having contracted by -6.10% in Q2 (April to June) of 2020.
The real GDP decreased significantly when the Q3 2020 report was compared to the corresponding period of the third quarter of 2019,
as it had documented an increment of 2.28 percent during the period. In a broader view, Nigeria’s economy (GDP) thus stood at -2.48 percent in the “first 9 months of 2020”
Areas That Pulls The Economy Of Nigeria Into Downturns
In the second and third quarters of 2020, Flashywap source reports from the NBS which states that oil and non-oil GDP declined,
making a contract sequentially. The agricultural sector, however, has been able to give the economy a boost, reducing the economy’s decline in Q3 2020.
Oil GDP contracted by -13.89 percent in the third quarter of this year, similarly to Q2 this year, but lower compared to -6.63 percent in Q2 2020; the sector grew by 6.49 percent in the corresponding period of Q3 2019.
Non-oil GDP also contracted by -2.51% in Q3 this year, resulting in loss of the -6.05% contraction in Q2 2020; the decline is greater than the 1.85% average growth rate in Q3 2019 throughout that period.
Sector Of Agriculture Throws Economy Lifeline In Nigeria
While oil and non-oil GDP contracted, the agricultural sector recorded 1.39 percent growth in Q3 2020,
although lower than 1.58 percent in Q2 2020, and NBS reported 2.28 percent growth in Q3 2019. Meanwhile the fish segment declined under Agric.
“According to NBS, “Crop production under Agric real GDP grew by 1.38% compared to 1.44% in Q2 2020 & 2.41% in Q3 2019,” indicating that,
“Fishing under Agric real GDP contracted by -2.07% compared to 5.68% in Q2 2020 & 1.68% in Q3 2019.
“Under Agric, livestock real GDP grew by 2.29 percent compared to 2.26 percent in Q2 2020 & 0.02 percent in Q3 2019.”
“Forestry under Agric real GDP grew by 2.55 per cent compared to 1.08 per cent in Q2 2020 & 3.78 per cent in Q3 2019,” the statistics agency also revealed.
Why Q3 Contracted Oil And Non-Oil
Even after the government reopened the economy, the influence of the COVID-19 pandemic and the national lockdown persisted.
Remember that a lockdown was declared in the last month of Q1 and Q2, affecting processing and marketing activities.
The price increase between Russia and Saudi Arabia had hampered oil prices before the emergence of COVID-19,
as there was more crude oil than the industry requested, resulting in a fall in the price of crude oil. And with the pandemic, because of the restriction of movement, demand for oil plummeted.
In addition, the manufacturing sector was unable to continue producing or trading its already produced goods,
contributing to a significant fall in income from the non-oil sector, thereby contributing to the Nigerian economy’s reduced revenue,
which led to the downturn. It is expected that the economy of Nigeria will recover or exit the recession in 2021.
Third Recession During Buhari’s Regime
It should be noted that this is the second time that Nigeria’s economy has entered an economic downturn under President Muhammad Buhari, and the third time under Buhari as Nigeria’s military and presidential leader.