The Nigerian government has said that the current recession will not last long.
Addressing the 26th Nigerian Economic Summit (NES#26) on Monday, November 23, 2020, organised by the Nigerian Economic Summit Group in concert with the Federal Ministry of Finance, Budget and National Planning, the Minister, Zainab Ahmed, said that the nation would exit the current recession early next year.
The trend of the growth, though still negative, she argued, suggested: “this would be a short-lived recession, and indeed by the fourth or, at worst, the first quarter of 2021, the country will exit recession.”
She said that by the fourth quarter of this year or in the first quarter of 2021, Nigeria would exit recession.
This is Nigeria’s second recession in five years, but the Minister said the Federal Government expected the recession to be shallow and recovery to be V-shaped.
She said the recession was occasioned by COVID-19 pandemic which ravaged the entire world.
According to her, many other countries were also forced into recession because of the virus, stressing that the outbreak of COVID-19, the Nigerian economy was experiencing sustained growth.
Mrs Ahmed stated that the growth in the economy had been on a quarterly basis, until the second quarter of 2020, when the impacts of the COVID-19 hit the economy hard.
Explaining that Nigeria was not alone in the woods, the minister noted that the nation had outperformed economies like the United Kingdom and others who went into recession in the aftermath of the pandemic.
She said that while the economy had entered into recession in the third quarter, the trend of the growth suggested that “this would be a short-lived recession, and indeed by the fourth or, at worst, the first quarter of 2021, the country will exit recession.”
The National Bureau of Statistics, NBS had on Saturday said that Nigeria’s economy had slipped into another recession, the second time since 2016 and the purportedly the worst since 1987 According to NBS, the economy shrank again in the third quarter, just like it did in the second quarter.
The nation’s economy posted a second consecutive negative growth, contracting by 3.62 per cent in the third quarter. The minister said that in the National Bureau of Statistics (NBS) recently published Quarter (Q3) 2020 Gross Domestic Product (GDP) estimates showed improved performance than the preceding quarter.
Ahmed said: “Nigeria’s GDP declined by -3.62% (year-on-year) in real terms in the third quarter of 2020, following a much larger contraction of -6.10% in Q2 2020.
“Following the traditional definition, this second consecutive contraction in GDP means the Nigerian economy officially entered a recession at the end of Q3 2020, as the impacts of the COVID-19 pandemic, and the national response to contain its spread, manifested across several sectors of the economy.
“While the decline of -3.62% (for 2020 Q3) and -2.69 percent (for the first 9 months of 2020) are unfavourable, it was better than the -6.01% earlier forecast by the National Bureau of Statistics and outperformed outturns from several domestic and international forecasts.
“Furthermore, this COVID-19 induced recession follows the pattern across the world where many countries have entered similar economic recessions.
“You will recall before the impact of COVID-19, the Nigerian economy had been experiencing sustained growth which was improving every quarter until Q2 2020 when the impacts of COVID-19 started to be felt.
“Other countries already in a recession like Nigeria include Austria, Belgium, Canada, Denmark, Estonia, Finland, Hungary, Ireland, Italy, Latvia, Lithuania, Mexico, Netherlands, Norway, Romania, Russia, Spain, UK, and the USA.
“Most of these countries have recorded contractions much deeper than the Nigerian economy. “It is also expected that South Africa that recorded a decline of over -50% in Q2 2020 compared to Nigeria of -6.10% will also enter a recession once its Q3 2020 results are announced.
“While the economy entered a recession in Q3 2020, the trend suggests this will be short-lived and by the end of the fourth quarter, we will return to positive growth.
“The exit from recession, it is anticipated, would be earlier than Q2 2021 forecast by the National Bureau of Statistics and some other domestic and international analysts.
“You will recall that the 2016 recession lasted for 5 quarters but, if trends continue, the current recession should last just one quarter. “Our expectations of a quick exit, which would be historically fast, is anchored on the several complementary fiscal, real sector and monetary interventions proactively introduced by the government to forestall a far worse decline of the economy, and alleviate the negative consequences of the pandemic.
“While there is always a lag between intervention and outcome, we can already see benefits on the economy as recorded in the better-than-expected results for Q3 2020.”
