A GDP growth above 1 percent for the first quarter of 2020 will be anything but a miracle for Nigeria’s oil-depended economy, according to estimates by analysts polled by BusinessDay.
The impact of the coronavirus crisis is expected to kick in and slow the growth of Africa’s largest economy to an average of 1 percent for the first three months of 2020.
“Anywhere between 0.9% – 1.2% will be the most probable outcome. Either way, it means quarterly growth will be half what it was in Q4 2019,” Obinna Uzoma, chief economist at EUA Intelligence said.
Nigeria’s Purchasing Managers’ Index (PMI), a gauge for manufacturing sentiments, slowed in March 2020 to its lowest in almost three years, according to data by the Central Bank of Nigeria (CBN).
In March, PMI stood at 51.1 index points when compared to 58.3 points in February. Although a 51.1 index point indicates an expansion in the manufacturing sector for the thirty-sixth consecutive month, it also depicts a disruption in economic activities brought about by the outbreak of COVID-19.
To curtail the spread of the deadly coronavirus, President Muhammadu Buhari recently announced the 14-day extension to a lockdown in Lagos, Abuja and Ogun states to combat the coronavirus pandemic.
Buhari said “it has become necessary to extend the current restriction of movement” that was set to expire later in the da
Nigeria reported 86 new cases of Coronavirus on Sunday, this brings the total number in Africa’s most populous nation to 627. Data by NCDC shows that 170 of the confirmed cases have been discharged while 21 were reported to have died from the infection.
“The economy is expected to take a hit from the spreading impact of COVID-19. Also, the monetary authorities are trying to keep the economy rolling by pumping money into the system, “Yinka Ademuwagun, Research Analyst at United Capital said adding that the injection can, however, achieve very little in terms of spurring growth in the face of rising lockdowns across the states.
The crash in the price of crude oil and dwindling revenues as a result of the impact of the coronavirus pandemic on the global economy is a risk that may fuel a contraction for Africa’s largest economy in 2020.
Nigeria’s external reserves dropped below $36 billion marks in March, the lowest levels in 29 months as a result of falling crude price.
The reserve which shows the nation’s ability to weather external shocks dropped to $35.9 billion from a $36.02 billion level according to Central bank’s data.
“Oil took the biggest hit this quarter with prices contracting by up to 55%,” Obinna said.
Since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the country’s economic growth been sluggish but only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants.
Out of about 4.8 million Nigerians who entered the country’s labour market between 2015 and 2018, about 635,000 jobs were created within the period, indicating only a job was available for every 8 people who joined Nigeria’s economically active workforce.
Source:
ENDURANCE OKAFOR