The current recession will not last long, the federal government has said.
Addressing the 26th Nigerian Economic Summit (NES#26) organised by the Nigerian Economic Summit Group in concert with the Federal Ministry of Finance, Budget and National Planning, the Minister, Mrs. Zainab Ahmed, said that the nation would exit the current recession lasted 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 the 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 with the outbreak of COVID-19, the Nigerian economy was experiencing sustained growth.
Mrs. Ahmed stated that the growth in the economy had been onnquaryerky 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 the National Bureau of Statistics (NBS) recently published Quarter (Q3) 2020 Gross Domestic Product (GDP) estimates showed improved performance than the preceding quarter.
According to her, “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.”
Why the economy fell into recession again — Buhari
Declaring the submit open, President Mohammadu Buhamadu Buhari, who was represented by the Vice President, Prof. Yemi Osinbajo said the country slipped into the current recession as a result of the severity of the global downturn caused by the COVID-19 pandemic including lockdowns, disruption in global supply chains, business failures and rising unemployment after 12 successive quarters of positive growth.
‘‘It is no longer news of course that the economy officially entered into recession with the release of the 3rd quarter figures on Gross Domestic Product by the National Bureau of Statistics which showed a decline in growth by -3.62% in that quarter.
‘‘ We must bear in mind that this decline was after 12 successive quarters of positive growth and came about as a result of the severity of the global downturn caused by the COVID-19 pandemic including lockdowns, disruption in global supply chains, business failures, and rising unemployment.
‘‘We can all recall of course that during the lock-down, farming did not take place, businesses were closed, schools were closed as were hotels and restaurants.
‘‘Also, airlines stopped flying while inter-state commerce was disrupted.. the economy only began to recover when these activities resumed, and if we are able to sustain the nearly three percentage point increase from the second-quarter decline of —6.1% the performance in the 4th quarter could take us into positive territory.
‘‘It was to mitigate this impact that the Federal Government introduced the Economic Sustainability Plan. All the programmes in the ESP are reliant on the private sector playing a key role in creating and conserving jobs and the production and delivery of services in agriculture, housing, solar power, and digital technologies to mention just a few of the sectors. To take the example of agriculture, with the support of the banking sector, the Federal Government is working to organise finance for farmers and we are also guaranteeing uptake of produce. On its part, the private sector is responsible for the desired local production, provision of services, and associated logistics across the agricultural value chain.’’
Osinbajo, who recommended a partnership with private sector panacea to the current economic challenge, said: ‘‘We expect that the larger companies and firms operating in all sectors of the economy will also build on this spirit of partnership by supporting small businesses especially by including them in value chains as suppliers, distributors, contract manufacturers, and service providers amongst other things.’’
Adopt Chinese model, NESG urges FG
Earlier in his remarks, the Board Chairman of the Nigerian Economic Summit Group (NESG), Ighodalo, Mr. Asue Ighodalo urged the government to desist from explaining away and blaming the current economic decline on a “global pandemic,” adding that China has recorded economic growth despite the fact that COVID-19 pandemic started from China.
Still on China’s economic feat as a result of long-term planning and consistency in policy implementation, Ighodalo said, “And, as easy as it would be to explain away our continuing decline with the words “global pandemic”, I would challenge us to bear in mind that while the Nigerian economy is expected to contract by nearly 5%, the Chinese economy is on track to grow by over 1%, this year.’’
“This is despite China being the epicentre of the pandemic, with almost twice as many cases and four times as many deaths as we experienced.
“The Chinese economy, in fact, has not contracted since 1976. Its growth streak has lasted for over four decades, through the global financial crisis, trade wars with the United States, and now a pandemic that tore through their country first, before splintering out to others.
“China has shown us what a serious nation can do when it looks back on its history, resolves “never again” to fail its citizens, and forges forward with a sense of urgency, discipline and purpose.
“It is essential to note that this comparison with China is not misplaced.
“In 1983 Nigeria’s per capita income was double that of China, and today, despite its population, China’s per capita income is over five times that of Nigeria.
“So while there are many plausible rationalisations for the state of our economy, I would urge us to engage throughout this summit with the example of China etched firmly in our consciousness.
“They put behind them the failed “Great Leap Forward” policy that caused tens of millions of Chinese deaths and fixed their eyes forward on the task of becoming a global superpower.
“There was the audacity to their vision. It is also time that we put audacity to our vision.
“Please note that this is not an argument for us to copy and paste the Chinese model. Far from it, however, we must copy the Chinese spirit.
“A plan that worked for China four decades ago is unlikely to offer a viable blueprint for our own development today.
“The world has changed. However, if China can consistently grow and pull millions of her people out of poverty, why can’t we?”