The GDP growth rate in 2020Q2 was estimated to be -6.10%, the first negative growth since the recession in 2016/2017. The GDP declined by 8.22 percentage points from 1.87% to -6.10% between 2020Q1 and 2020Q21. The fall was largely driven by a slowdown in international and domestic activities occasioned by lockdown measures to prevent the spread of the coronavirus. Further disaggregation of the data shows that the non-oil sector GDP decreased by -6.05% (first negative decrease since 2017Q3). Also, the oil sector experienced a higher negative growth, declining by -6.63% within the same period. Contractions in growth were also recorded in the industry (-12.05%) and service sectors (-6.78%) while the growth rate in the agriculture sector remained positive (1.58%). Given that the strict lockdown measures were lifted at the end of the second quarter, and Nigeria’s major trading partners – Europe, the United States, and China – have reopened their economies, the GDP growth rate in 2020Q3 is expected to be more favourable than the preceding quarter. However, the coverage and targeting of the existing interventions for the vulnerable households and affected businesses should be improved in order to enhance their reach.
September 16, 2020
Nigeria Economic Update (Issue 34)
Sub-Saharan Africa experienced its worst economic performance in over two decades in 2016, with growth slowing to 1.5 percent. The poor performance in South Africa and oil exporting countries is responsible for attenuating regional growth rate, due to their high collective contribution to regional GDP, despite robust performance in non-resource intensive countries. Growth in Sub-Saharan Africa is projected to slightly improve in 2017 (2.9 percent) and further strengthen in 2018 (3.6 percent). At the sub-regional level, growth prospect is estimated to be highest in West Africa (4.78 percent), attributable to 5.93 percent growth rate from West African Monetary Union (WAEMU) Countries. East Africa is expected to grow at 4.5 percent, Southern Africa 3 percent, and Central Africa 2 percent. Agricultural exporting countries are projected to grow at around 7 percent, while oil producing countries are estimated to grow at 1.9 percent, which indicates a recovery from the negative growth recorded in 2016.
The Naira/Dollar exchange rate remained unchanged at ?199/$ in the official market but depreciated from ?263/$ to $267 at the Bureau De Change (BDC) market segment this week. As the naira depreciates, the CBN forex restriction measures continue to widen the gap between the official rate and BDC, which has led to increased calls for naira devaluation. The International Monetary Fund (IMF) and Business owners are among the major advocates for a relaxation of the forex restrictions set by the CBN, in order to enhance the level of economic activities.