Policy Brief & Alerts

May 17, 2017

Understanding The Ongoing Recession In Nigeria:A Synthesis Of The Events And Policy Options

In
the second quarter of 2016, the Nigerian economy witnessed its first recession
in twenty years due to the interplay of several external and internal factors.
The recession has continued until date and has given rise to relentless
unemployment rate and job losses, double digit and soaring inflation, currency
depreciation and widening gap between parallel market and official exchange
rates, amongst other adverse effect on individuals and firms in the country.
Thus, there is a need to take a deeper look into the nature of the present
recession as well as the impact of monetary and fiscal policy responses thus
far, in order to shed light on the way forward towards tackling the recession
and ensuring sustainable economic growth. This paper analyses the ongoing
recession in the Nigerian economy to provide insights into the interplay of
events and recommendations for policy.

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Crude oil price continued to increase in the period under review, reaching its 2016 peak at $50.30 on June 2, 2016. Specifically, OPEC weekly basket price increased by 1.43 percent from $44.65 on May 27, 2016 to $45.29 on June 3, 2016. Brent was sold for $49.96 on June 3, 2016. The present rise in crude oil price can be attributed to oil production shocks in several oil-exporting countries, and the general expectation of a further cut in output following the OPEC meeting in Vienna on June 2, 2016. However, the OPEC meeting ended with no agreement on production quotas. In Nigeria, oil production level increased in the period under review, following repairs on some of the damaged oil and gas facilities. Precisely, Nigerias output increased by 200,000 barrels on June 3, 2016 to 1.6 million barrels.

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The Role Of Fiscal Policy In Promoting Growth

The paper examines fiscal policy as it influences growth through taxes and service delivery. It also reviews Nigerias experience with fiscal policy as well as challenges to its current system.