…Fundamentals still shaky – Experts
Agriculture and manufacturing were the two key sectors that rescued Nigeria’s economy from recession in the second quarter of 2017.
The Gross Domestic Product (GDP) report released yesterday by the National Bureau of Statistics (NBS) showed that Nigeria has exited recession with positive growth of 0.55 per.
Agriculture recorded stronger positive growth of 3.01 per cent during the period.
The NBS identified crop production as the major driver of growth in the agriculture sector.
per cent in recorded in the second quarter of 2016.
The growth in agriculture and manufacturing is gradually narrowing the gap between oil and non-oil GDP.
The report showed that in real term, the Non-oil GDP contributed 99.11 per cent of GDP.
The report showed that oil GDP hit 1.64 per cent in second quarter of 2017, up from -11.63 per cent in second quarter of 2016 and -15.40 per cent in the first quarter of 2017 while the non-oil GDP grew at 0.45 per cent, up by 0.83 per cent points from the record of the first quarter of 2016..
Manufacturing grew for the second consecutive quarter in 2017 to stand at 0.64 per cent compared to 1.36 per cent in first quarter of 2017 and -3.36 per cent in second quarter of 2016.
Trade also aided the exit from recession as its growth contracted from -3.08 per cent recorded in first quarter of 2017 to -1.62 per cent in the second quarter of 2017.
Analysis of the report also showed that finance, insurance, electricity, gas, steam, air-conditioning supply and other services also aided growth of the overall GDP.
Mining and quarrying also contributed to the positive GDP as they grew by 1.65 per cent in the second quarter, pushing up the growth of the non-oil sector.
Some experts said this, may not be unconnected with the federal government’s policies in revamping agriculture such as promoting local cultivation of rice, tomatoes and other agricultural produce.
Economists call for caution
According to professor of economics and former Chief Economic Adviser to the President Obasanjo, Ode Ojuwu the exit from recession should not be a reason for government to relax on its good initiatives such as improving lending to the agric sector and infrastructure provision.
Professor Ujowu, who is also the chairman of the Daily Trust Board of Economics, said the growth recorded is too small to celebrate but calls for optimism.
What government needs to do is to do more in electricity supply, access road to farmlands, reduce post-harvest losses and improve security in the north east region.
He urged government against panic due to the rising food prices, as farmers are encouraged if they are getting more value from what they produce.
A Financial economist from the University of Uyo, Professor Leo Ukpong, also advised the federal government to focus on the non-oil sector of the economy to consolidate on the current positive growth.
Professor Ukpong said government must continue to implement its policies and pump money into the economy to keep the country away from recession.
Another economist and a lecturer at the Department of Economics of Kaduna State University, Dr. Aminu Usman, warned that the federal government should not relax as the fundamentals of growth in the economy are still shaky.
He said to consolidate the current growth the federal government must intensify the recovery process and implement its expansionary growth.
“If anything happens to the oil market between now and December, we can return to recession. If anything happens in the Niger Delta area, we will be back to where we are coming from,” he said.
Dr. Usman told the Daily Trust that the delay in the implementation of the 2017 budget is a risk that threatens the gains recorded in the last one year that pulled the country out of recession.
“We need to engage the international oil producers to ensure that this relative price stability is sustained and government must be more serious in the implementation of its fiscal policies,” he advised.
The Director General of the Abuja Chamber of Commerce and Industry, Chijioke Ekechukwu, told the Daily Trust that there are clear signs that the country was already out of recession even before the apex statistical body in the country announced it.
Ekechukwu said the Purchasing Manager’s Index is already above 50, an indication that manufacturing sector is growing well.
“With this, you just know that the economy is driving itself, especially through the real sector and the small and medium enterprises. Prices of Goods and services are gradually getting down,” he said.
He further said there is enough stability in the foreign exchange market unlike before, a development that is also stabilising prices of goods and services.
He said agricultural activities are increasing and people are beginning to have confidence in locally grown food, an indication that the GDP is getting better.
Lukman Otunuga, a financial expert with FXTM said: “The largest economy in Africa displayed its resilience yet again by growing 0.55% in Q2, despite suffering a painful contraction for five consecutive quarters. With Nigeria’s economic rebound powered by sustainable resources such as manufacturing, agriculture and trade, the overall outlook continues to appear quite encouraging. While oil was also a player in the nation’s recovery, it should be kept in mind this source of growth may be temporary, as Nigeria still remains in an ongoing quest to diversify its interests away from oil reliance.
“Sentiment towards the Nigerian economy is likely to receive a boost following the release of such positive GDP data, with investors across the globe and at home becoming increasingly optimistic over the nation’s outlook.”
Nigerians react:
Meanwhile, Daily Trust spoke to Nigerians in the streets on the economy of the country and whether or not their standards of living have improved.
A dealer of plumbing materials in Jabi, Emeka Ani, said the prices of goods and services started increasing in 2015 and became worst mid-2016, making it difficult for customers to patronise him. A barber, Yunana Musa, said he was yet to see improvements in the economy, blaming the downturn on the inability of government to create enabling environment for business to thrive.
Commenting on dwindling purchasing power of consumers, he said, “In the past few years, I usually close work at 12 midnight; but now, I even close at 8pm as there are no customers in sight.”
A trader in Jabi market, Chioma Emmanuel, complained about the rate at which the prices of goods skyrocketed from 2016 to 2017, saying, it has drastically reduced business activities and standard of living.
While expressing optimism that Nigeria’s economy will be better if government provide jobs, which will further boost patronage and increase productivity, she said, “People always complain about recession and lack of job in the country, which to me is the major cause of most business misfortunes.”
Agriculture growth has been positive throughout 2017 rising to 3.39 per cent in the first quarter of 2017, slightly lower than the 4.53
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