The news that the nation exited its worst recession in 25 years was received with cautious optimism by a cross section of Nigerians on Tuesday, with many economists and analysts saying the 0.55 per cent growth in the Gross Domestic Product in the second quarter was slower than expected.
They also warned that the growth, which was largely as a result of rising oil price and improved production in the period, was fragile and that the nation could slip back into recession if the price of crude suffered a dramatic decline.
Leading the call for caution was President Muhammadu Buhari, who said the development would not make any impact until it had effect on the lives of ordinary Nigerians.
The National Bureau of Statistics had earlier in the day announced that the Nigerian economy finally came out of recession after recording five consecutive quarters of contraction, with the GDP recording a growth rate of 0.55 per cent in the second quarter as against the -0.91 revised rate recorded in the first quarter of this year.
The Statistician-General of the Federation, Dr. Yemi Kale, stated that the second quarter growth rate was 2.04 per cent higher than -1.49 per cent recorded in the corresponding second quarter of 2016.
In monetary terms, the report put the aggregate GDP for the second quarter of this year at N26.98tn, noting that this was higher than the nominal GDP of N23.54tn recorded in the corresponding second quarter of 2016.
The report read in part, “In the second quarter of 2017, the nation’s GDP grew by 0.55 per cent year-on-year in real terms, indicating the emergence of the economy from recession after five consecutive quarters of contraction since Q1 2016.
“This growth is 2.04 per cent higher than the rate recorded in the corresponding quarter of 2016 (-1.49 per cent) and higher by 1.46 per cent points from the rate recorded in the preceding quarter. Quarter-on-quarter, the real GDP growth was 3.23 per cent.”
Providing a sectoral performance of the GDP growth rate, NBS report stated that the agricultural sector grew by 3.01 per cent in the second quarter from 3.39 per cent in the first quarter of this year.
It said crop production under agriculture rose by 3.21 per cent in the second quarter from 3.50 per cent recorded in the first quarter, while crude petroleum and natural gas recorded a growth rate of 1.64 per cent in the second quarter from a contraction of -15.6 per cent in the first quarter.
The GDP report stated that the manufacturing sector grew by 0.64 per cent in the second quarter from 1.36 per cent in the first quarter of this year.
Our work not yet done, says Buhari
Buhari said until the country’s exit from recession could translate into meaningful improvement in peoples’ lives, “our work cannot be said to be done.”
The President said this in Daura while fielding questions from reporters shortly after receiving the President of Niger, Alhaji Mahamadou Issoufou.
According to a statement by his Senior Special Assistant on Media and Publicity, Garba Shehu, the President said Nigerians would experience a change in their living conditions soon.
“Certainly, I should be happy for what it is worth. I am looking forward to ensuring that the ordinary Nigerian feels the impact,” Buhari stated.
He commended all the managers of the economy for their hard work and commitment, stressing that more work needed to be done to improve the growth rate.
“Until coming out of recession translates into meaningful improvement in peoples’ lives, our work cannot be said to be done,” the President added.
‘Improved oil prices aided exit’
The Special Adviser to the President on Economic Matters, Dr. Adeyemi Dipeolu, attributed Nigeria’s exit from economic recession to the slight improvement in oil prices.
Dipeolu, in a statement on Tuesday, said that despite the exit from recession, “the nation’s economic growth remained fragile and vulnerable to policy slippages.”
He said the oil sector grew by 1.64 per cent compared to -15.60 in the first quarter of the year, an increase of up to 17 percentage points.
Dipeolu assured Nigerians that the current administration would intensify efforts to actualise the nation’s Economic Recovery and Growth Plan.
“This improvement is partly due to the fact that oil prices, which have improved slightly from the lows of last year, have been relatively steady, as well as the fact that production levels were being restored,” he added.
He stated, “The GDP figures give grounds for cautious optimism, especially as inflation has continued to fall from 18.72 per cent in January 2017 to 16.05 per cent in July 2017. Foreign exchange reserves have similarly improved from a low of $24.53 in September 2016 to about $31bn in August 2017. In the same vein, capital importation grew by 95 per cent year-on-year, driven by portfolio and other investments, but also notably by foreign direct investment, which increased by almost 30 per cent over the previous quarter.
“Foreign trade has also contributed to improving economic conditions, with exports amounting to N3.1tn in Q2 2017, while imports, which increased by 13.5 per cent, amounted to N2.5tn in the same period. The overall trade balance thus remained positive at N0.60tn.
“Unemployment, however, remains relatively high but job creation is expected to improve as businesses and employers increasingly respond more positively to the significantly improving business environment and favourable economic outlook.”
…shows Buhari is working
The Special Adviser to the President on Media and Publicity, Mr. Femi Adesina, says the country’s exit from economic recession shows that President Muhammadu Buhari is working hard for the prosperity of Nigerians.
Adesina said this while addressing a solidarity rally organised by the Centre for Civil Society and Justice, according to a statement by the Deputy Director of Information at the State House, Abiodun Oladunjoye.
The President’s spokesman said Nigeria entered into recession due to the mistakes of the past but added that Buhari battled to restore the nation’s glory.
Adesina told the crowd that he would relay their message of support and solidarity on the unity of Nigeria to the President.
MAN, LCCI cautious
The Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry have welcomed the news of the country’s exit from recession.
The Director-General, LCCI, Mr. Muda Yusuf, noted that the development was a positive signal to the global investing committee.
According to him, it will improve the perception of the economy, especially by foreign investors.
Yusuf stated, “The economy will no longer be characterised as an economy in recession. It will also improve the status of the country as an investment destination.
“This will boost investors’ confidence. The exit from recession is also an indication that some of the policy actions of the government have impacted positively on the economy.”
He pointed out, however, that the GDP numbers and the exit from recession were not end in themselves but means to an end.
The LCCI DG added, “What ultimately matters to business is the impact on the cost of doing business, productivity of the economic players, competitiveness of firms and the sustainability of investment.
“On the level of the individual citizens, what matters is the welfare effect of the GDP numbers, the impact on food prices, cost of health care, transportation cost, power supply and the purchasing power. These are some of the ultimate outcomes that will determine whether or not the exit from recession will be celebrated.”
He said the exit from recession had been driven by improvement in oil price and output, liquidity in the foreign exchange market, commitment of the government to the ease of doing business and reforms in the forex policy.
Yusuf suggested that in order to sustain the momentum of recovery and the current positive outlook, there must be reduction in the multiple exchange rates; alignment of procurement policy at all levels of government to support domestic investment; investment policy that would protect domestic investors; investment-friendly tax and interest rate policies; and trade policy that would reduce cost of operations across sectors.
The President, MAN, Dr. Frank Jacobs, described the development as a reflection of the growth that began in the economy since the new forex policy of the Central Bank of Nigeria was announced in February.
He, however, stated that the impact of Nigeria being out of recession might not trickle down to the common man and reflect on the prices of goods due to the high exchange rate.
Jacobs suggested that the government should continue with sound policies by involving stakeholders in their formulation, adding that policies should be consistent and allowed ample time before being terminated.
“For instance, the success recorded in the Economic Recovery and Growth Plan was as a result of the involvement of stakeholders from its inception,” he noted.
Commenting on the report, finance and economic experts expressed mixed reactions over the GDP growth numbers.
While some of them called on the Federal Government to put in place adequate measures to consolidate on the growth rate, others said current economic realities did not support the growth figure.
Those who spoke were a former Managing Director, Nigeria Deposit Insurance Corporation, Mr. Ganiyu Ogunleye; Director-General, Abuja Chamber of Commerce and Industry, Mr. Chijioke Ekechukwu; and Registrar, Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi.
Ekechukwu said that the economy showed a lot of improvements in the second quarter to stimulate recovery.
He stated that the performance of some key economic variables indicated that the Nigerian economy was showing huge signs of recovery.
For instance, he said the increase in the Purchaser Manager’s Index, which rose for four consecutive months, showed that manufacturing activities were bouncing back.