73 Views

Is Nigeria Out of Recession?

The ‘National Bureau of Statistics’ latest overview of National Productivity between April-June 2017, has revealed that, the steady decline in output of goods and services, which began in March 2016, has now been thankfully reversed by June 2017.

Indeed, total output of goods and services, in the preceding decade before 2016, recorded positive annual growth rates which fluctuated between 3-6%.

Unfortunately, however, the crash in crude oil prices, in recent years, significantly reduced revenue and therefore impacted negatively on consumer demand and Nigeria’s capacity to produce. Consequently, by March 2016, for the first time in 25 years, gross production and output, invariably began to actually contract rather than grow.

Ultimately, the negative growth recorded, between January-June 2016, technically shoved Nigeria’s economy into recessionary growth mode, which unfortunately stubbornly prevailed until 2017 with the 0.55% positive productivity growth rate recorded, by June ending 2017.

Although, it is reassuring that the hemorrhaging has reportedly stopped, nonetheless, President Buhari rightly remains, reportedly unimpressed with the recorded positive turnaround, until such bland, but positive statistical rates, translate to food on the table and more jobs with steadily improving social welfare for more Nigerians.

Equally, the news, of Nigeria’s economy exit from recession has been taken with a pinch of salt, by public respondents, in street and marketplace interviews on several media. The question, on the lips of the man on the street, is often that, “why does cost of living still remain so oppressive, if truly, Nigeria’s economy is out of recession?”

In reality, apart from the soft assurance that the economy may have turned the corner and began a slow climb towards recovery, with the reported marginal growth rates, it would however, be simplistic to immediately expect a leap in positive impact on cost of living or social welfare, especially when, it required well over 12 months to erase just about 2% negative growth in output. Consequently, the reported exit from negative growth, will not immediately return the economy from the adjusted, presently below $250bn GDP to the more robust annual output level of over $400bn before recession set in.

Instructively, nonetheless, even a rapid climb back to the premium earlier growth rates of 5-6%, may regrettably, still not add much value to the welfare of Nigerians. Curiously, in retrospect, the prime growth rates of 5-6%, sadly, did not even put a dent on the rising level of unemployment in the country, at that time; furthermore, the critically destabilizing impact of double digit inflation rates which had severely constrained consumer demand and deepened poverty simultaneously, also remained unresolved; worse still, cost of borrowing to the otherwise still resilient productive investors, inexplicably also remained sticky around 20%, and clearly increased the level of risk, while also reducing the survival level for local businesses.

The obvious dilemma, therefore, must be why Nigerians did not benefit significantly from the earlier robust growth rates, and why this objective still remains an unqualified utopia in the expectations of both government and its acclaimed experts.

Arguably, the higher earlier growth rates of 5-6% were significantly boosted by bountiful foreign exchange from exceptionally favourable crude oil prices. Conversely also, the slide into negative growth, from 2016, is also largely attributed to collapse in oil prices and output and the related dwindling export revenue.

The latest NBS overview, suggests that the turnaround of growth in economic activity witnessed in Q2-2017 was driven by, marginal sectoral growth in other sectors, such as Agriculture, Manufacturing, Construction, Finance and Insurance and Real Estate. Nonetheless, the contribution from relatively stable oil prices around $50/barrel, still clearly remains the major fuel that has once again driven the economy, round the bend, on to the road to positive growth rates, but uncertain inclusive economic growth!

Why do I say uncertain economic growth? Well, the higher growth rates reported pre-2015, notably, sadly failed, inexplicably, to deliver on inclusive economic growth. However, the reason for this failure has always been evident and predictable. Instructively, increasingly bountiful export revenue from crude oil has not produced any significant extensive value chain that includes and enriches the lives of more Nigerians.

In practice, the multi faceted sectors of every economy, even in those with modest natural resource endowment, are generally galvanized to create wealth, with increasing jobs opportunities, with the application of monetary instruments, by the respective Central Banks with the complementary support of fiscal policies captured in annual budgets of each country.

In the absence of best practice management of these monetary instruments, even stupendously resource rich nations, such as Nigeria, will invariably endlessly battle to make sense of the serious economic contradictions of the impact of inchoate government policies, which still precipitate poverty, rising unemployment and deep social anguish.

For example, INFLATION is not often recognized for what it is, but spiraling inflation is, invariably, not only clearly anti growth, but, infact, represents financial and economic terrorism, that is surely more oppressive and personal to every family and is certainly more dangerous and pervasive (with no household spared) than the clearly relatively ‘modest’ and largely localized, destructive impact, of either Boko Haram or Niger Delta militancy.

Inflation, at large, ultimately, destroys the value of all incomes, while its vicious impact also erodes and upturns basic social values. Consequently, increasing productivity and output will also become a challenge, when everyone’s income commands less and less value, and inflation contracts consumer demand, to compel massive reduction in the output of goods and services.

Furthermore, since it is unrealistic for anyone to lend out money at a rate below inflation rate, spiraling inflation will inevitably also propel higher cost of borrowing in every economy, to make local production gradually uncompetitive. In other words, inflation will reduce consumer demand and output and also make it much more expensive for anyone who wishes to invest and produce to borrow with interest rates, which oppressively exceed 20%.

Similarly, since spiraling inflation is invariably traceable to persisting excess liquidity of the domestic currency, the exchange rate of the Naira, will also continue to suffer steady depreciation, if the same constitutional Custodian of the Naira, ceaselessly AUCTIONS rations of dollars, in a market that is admittedly, embarrassingly flush with excess Naira.

This reality was clearly amplified by the prevailing, relatively weak and almost static Naira exchange rate, even when GDP growth rates of 5-6% were fueled by over $140/barrel crude price and 2 million barrels daily production, were recorded in previous years.

In conclusion, therefore, the return to negative output growth rates will remain very likely, so long as critical inclusive growth instigators, such as inflation remains in double digits, while borrowing to produce carries over 20% interest rate.

SAVE THE NAIRA! SAVE NIGERIANS!!

By Henry Boyo

Get the best viral stories straight into your inbox!

Don't worry, we don't spam

Leave a Comment

Your email address will not be published.

Latest Posts

Singer, Wizkid Gives Health Update, Appreciates Fans For Their Support
Entertainment
39 views
Entertainment
39 views

Singer, Wizkid Gives Health Update, Appreciates Fans For Their Support

Mabel - September 20, 2017

Nigerian singer, Wizkid who a few weeks ago revealed that he’s been battling with an unknown ailment that has prevented him from performing has bounced back. He took to…

Rivers Governor, Nyesom Wike Assigns Portfolios To 20 New Commissioners… [See Full List] 
Politics
30 views
Politics
30 views

Rivers Governor, Nyesom Wike Assigns Portfolios To 20 New Commissioners… [See Full List] 

MT - September 20, 2017

The Rivers State Governor, Nyesom Ezenwo Wike has on Wednesday, assigned portfolios to Cabinet Commissioners in the state. According to a statement posted on Facebook the newly…

Rochas Okorocha Has This To Say On IPOB, Biafra: “Hausas Can Win Election Without Igbos”
Politics
47 views
Politics
47 views

Rochas Okorocha Has This To Say On IPOB, Biafra: “Hausas Can Win Election Without Igbos”

MT - September 20, 2017

Rochas Okorocha has revealed that Igbos play the worst politics in Nigeria saying that Hausas can win election without them. Imo State Governor, Rochas Okorocha has accused…

Meet Endurance Otobi, The Blind Shoe Cobbler Who Is Defying All Odds
Business
35 views
Business
35 views

Meet Endurance Otobi, The Blind Shoe Cobbler Who Is Defying All Odds

PH - September 20, 2017

Endurance Otobi is a blind shoe mender from Delta state Nigeria. He was not born blind, he started having problems with his sight while he was in primary…

Kano Government Declares Friday Public Holiday To Mark Islamic New Year
Religion
33 views
Religion
33 views

Kano Government Declares Friday Public Holiday To Mark Islamic New Year

Mabel - September 20, 2017

The Kano State Government has declared Friday, September 22, as public holiday to mark the new Islamic year. This is contained in a statement signed by the…

Anthony Joshua Names Two Boxers Who Can Strip Him Off World Heavyweight Champion
Sports
56 views
Sports
56 views

Anthony Joshua Names Two Boxers Who Can Strip Him Off World Heavyweight Champion

MT - September 20, 2017

Nigerian born British boxer, Anthony Joshua has opened up on two people who pose a threat to his soaring fame in boxing.   Anthony Joshua Nigerian-British boxing…

Fasasi Tosin Oladayo; The 18 Year-Old Nigerian Inventor With Four Patents To His Name
Inspiring
74 views
Inspiring
74 views

Fasasi Tosin Oladayo; The 18 Year-Old Nigerian Inventor With Four Patents To His Name

MT - September 20, 2017

Fasasi Tosin Oladayo  is a third year Aerospace engineering student. He currently own four patents and he is also the founder of Nigeria biggest telecommunication equipment company…

LIST: 4 Highly Profitable Talents And How They Work; According to An Expert
Inspiring
60 views
Inspiring
60 views

LIST: 4 Highly Profitable Talents And How They Work; According to An Expert

MT - September 20, 2017

When most Africans living in Africa hear or read the word talent the first thing that goes into their mind is music. Music has become one talent…

Serena Williams’ Fiance Is Enjoying Fatherhood And Here Is A Proof
Inspiring
55 views
Inspiring
55 views

Serena Williams’ Fiance Is Enjoying Fatherhood And Here Is A Proof

MT - September 20, 2017

  Serena Williams’ Fiance, Alexis Ohanian is really enjoying fatherhood. Yes, though engaged to a tennis star, he is absolutely enjoying the fatherhood and of course a happy…

Togolese Activist Called Out Yemi Alade For This Reason… Here’s What She Said
Entertainment
38 views
Entertainment
38 views

Togolese Activist Called Out Yemi Alade For This Reason… Here’s What She Said

MT - September 20, 2017

  It is no more news that Togo at the moment is unrest politically and following the crisis in the western African country between the ruling class and…

Psquare’s Beef: This Lola Okoye’s Message On Hate Is Totally Thought-Provoking [See Details]   
Entertainment
59 views
Entertainment
59 views

Psquare’s Beef: This Lola Okoye’s Message On Hate Is Totally Thought-Provoking [See Details]  

MT - September 20, 2017

  Several people on social media have been pointing accusing fingers at Peter Okoye’s wife, Lola Omotayo for been responsible for Psquare’s beef, it even got worse…

Comedian, Klint da Drunk And Wife Celebrate 10th Wedding Anniversary
Romance and Love
50 views
Romance and Love
50 views

Comedian, Klint da Drunk And Wife Celebrate 10th Wedding Anniversary

Mabel - September 20, 2017

Comedian Klint da Drunk and his wife, Lilien Klint-Igwemba, are celebrating their 10th wedding anniversary today, September 20th 2016. They both took to their Instagram pages to share…

What We Will Do If Buhari Deploys Military To Niger Delta
Politics
56 views
Politics
56 views

What We Will Do If Buhari Deploys Military To Niger Delta

PH - September 20, 2017

The Ijaw Youth Council, IYC, has warned the President Muhammadu Buhari-led Federal Government against its plan to deploy troops under the Operation Crocodile Tears to the Niger…

We Didn’t Burn Any Mosque in Enugu
Politics
34 views
Politics
34 views

We Didn’t Burn Any Mosque in Enugu

PH - September 20, 2017

The Indigenous People of Biafra (IPOB) has denied allegations that it was responsible for the burning of a mosque in Enugu State on Monday. The group, speaking…

Why I Rejected El-Rufai’s Endorsement
Politics
40 views
Politics
40 views

Why I Rejected El-Rufai’s Endorsement

PH - September 20, 2017

Lawmaker representing Kaduna Central Senatorial District, Shehu Sani, has described the endorsement of Governor Nasir el-Rufai by the All Progressives Congress in Kaduna State for a second…

Why Reps Ordered Banks To Unfreeze Patience Jonathan’s Account
Politics
38 views
Politics
38 views

Why Reps Ordered Banks To Unfreeze Patience Jonathan’s Account

PH - September 20, 2017

The House of Representatives committee yesterday, ordered some banks to immediately unfreeze accounts of former First Lady, Mrs Patience Jonathan. The committee also ordered Aridolf Wellness Home…

How Buhari Delayed In Dealing with Nnamdi Kanu
Politics
45 views
Politics
45 views

How Buhari Delayed In Dealing with Nnamdi Kanu

PH - September 20, 2017

A chieftain of the All Progressives Congress (APC) in Edo State, Charles Idahosa, has said President Muhammadu Buhari delayed in dealing with several issues especially Nnamdi Kanu,…

Why We Suspended Attacks On Niger-Delta Oil Facilities
Politics
49 views
Politics
49 views

Why We Suspended Attacks On Niger-Delta Oil Facilities

PH - September 20, 2017

Reformed Niger Delta Avengers, RNDA, a coalition of nine militant groups, has announced temporary suspension of attacks on oil and gas facilities in the Niger Delta region.…

Loading...