The National Bureau of Statistics (NBS) has reported a contraction in Nigeria’s Gross Domestic Product (GDP) in the second quarter of 2020.1 The report stated a contraction of -6.10% in comparison to the 1.87% growth that was recorded in the first quarter of the year. This contraction is attributed to the COVID-19 pandemic, the consequential decline of output and the crashing of oil prices. Nigeria slowly recovered from recession in 2017 and has been on a gradual path towards growth. However, the current GDP contractions indicate that a second recession could be approaching. Steep declines in GDP growth calls for the diversification of the economy to stimulate growth in various areas including agriculture and agribusiness, manufacturing, and real estate. In addition, overreliance on global value chains particularly in the manufacturing sector should be curbed in order to improve resilience.
September 28, 2020
Nigeria Economic Update (Issue 36)
Global oil price edged upwards in the review week. International crude benchmark, Brent, rose week-on-week by 3.1 percent to $50 per barrel as at July 21, 20173 a level it had not attained since June. The remarkable gains followed demand-side progress earlier statistics from China showed increase in crude imports, indicating prospects of higher demand. This was also complimented by the huge drop in US domestic crude production (Crude reserves fell by 4.7 million barrels). If the trend is sustained, Nigeria could record further rise in its Gross Federally Collected Revenue. Nevertheless, there remains a need for Nigeria to overcome the challenge of harnessing its oil and gas resources by making strategic policy choices andensuring coordination in policy implementation to minimize macroeconomic distortions.