Business

Nigeria’s economy heads towards recession, as GDP records 12yr low

One year after, Nigeria worse off with Buhari's ministers

The National Bureau of Statistics, NBS, has released a grim report on Nigeria’s economy, as its Q1 2016 report showed that the nation’s real Gross Domestic Product (GDP) growth rate declined to -0.36 per cent compared to 2.11 per cent in Q4 of 2015.

This latest report on the negative growth rate may be a signal that the nation’s economy is heading towards recession.

According to the report, unemployment rate in the Nigerian economy climbed to 12.1 per cent in the first quarter of this year of 2016 compared to 10.4 per cent in Q4 of 2015 and 9.9 per cent in the Q3 of 2015.

The report also shows that the economy contracted to 3.86 per cent and 2.35 per cent respectively in Q1 of 2015 and Q2 of 2015 before rebounding to 2.84 in Q3 and further shrunk to 2.11 per cent Q4 of 2015.

The decline is the first contraction since June, 2004, making the economy to be at its lowest in 12-years.

Q1 growth rate was lower by 2.47 per cent from the growth recorded in the preceding quarter and further lower by 4.32 per cent from the rate recorded in the corresponding quarter of 2015. Quarter on quarter, real GDP slowed by 13.71 per cent, the NBS report said.

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Oil production was not left out, as the level of production fell by 0.07mbpd in comparison with the corresponding quarter in 2015 when output was recorded at 2.18mbpd.

The oil sector contributed 10.29 per cent to total GDP, higher than the share in Q4 of 2015 by 2.24 per cent but marginally lower than the contribution in the corresponding period of 2015. However, real growth of the oil sector slowed by 1.89 per cent (year-on-year) in Q1 of 2016.

According to the report, aggregate GDP stood at N22.26 trillion (in nominal terms) at basic prices or 14.15 per cent lower than the N24.31 trillion in Q4 2015.

Nevertheless, the non-oil sector slowed 0.18 per cent in real terms in Q1, representing 5.77 per cent lower from the corresponding quarter in 2014 and 3.32 per cent lower than the previous quarter.

The unemployment rate in the Nigerian economy climbed to 12.1 per cent in the first quarter 2016 compared to 10.4 per cent in Q4 of 2015 and 9.9 per cent in Q3 of 2015, as the number of unemployed in the labour force increased by about 1.449 million persons between Q4 of 2015 and Q1 of 2016.

The report also noted that the country was unable to create the 1.5 million jobs required between Q4 of 2015 and Q1 of 2016 to keep the unemployment rate constant at 10.4 per cent in Q4 of 2015.

Also, the NBS stated that the active labour population-those within the working age population willing, able and actively looking for work- increased 1.99 percent to 78.9 million in Q1 compared to 76.96 million in Q4 of 2015 and 75.94million in Q3, adding that an additional 1,528,647 economically active persons within ages 15-64 entered the labour force between January 1 and March 31 2016 while underemployment rate increased 19.1 per cent from 18.7 per cent in Q4.

The report says: “The number of those not willing or able, or not actively looking to work in the economically active population however declined to 27.5 million in Q1 of 2016 from 28.06 million in Q4 of 2015 meaning about 0.55 million people in the working age population that chose not to work in Q4 of 2015 decided to work in Q1 of 2016 thereby adding to the labour force.

“This increase in underemployment is in line with an increasing trend of informal sector job creation outpacing formal sector job creation forcing people to settle for less preferred underemployment, but it also included those that choose to work fewer hours or not be engaged in work full time for various reasons.”

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