Experts urge FG on measures to rebound economy

Economic experts have said the citizens should prepare for a more depressed economic indices for the third quarter of 2020 as COVID-19 lock-down continue to ease up.

According to the numbers contained in the GDP report, the performance recorded in Q2 2020 represents a drop of 8.22% points when compared to Q2 2019 (2.12%), and 7.97% points decline when compared to Q1 2020 (1.87%).

Apparently, the significant drop reflects the negative impacts of the disruption caused by COVID-19 pandemic and crash in oil price on the Nigerian economy

Mohamed Abu Basha, Head of Macro Economy, EFG Hermes, explained that the ‘recovery‘ remains crippled by the factors of Forex shortages, limited fiscal space and absence of structural reforms.

Basha said, “We expect GDP contraction to continue in second half of 2020 (2H20); FX shortages will continue to weigh on economic activity, a pressure that has been magnified by limited fiscal support amidst depressed oil prices.

“We maintain our forecast of a GDP contraction of 4.5% in 2020 before a weak recovery sets in 2021.”

Basha said there was no end in sight for FX shortages in the country.

Chief Consultant at B. Adedipe Associates Limited, Biodun Adedipe said: “There is a derived demand for foreign exchange, necessarily and inexplicably, the exchange value of the Naira has to give way.”

He said the country may see worst picture in Quarter 3, which may see the country slip into a technical recession because that would amount to two consecutive negative growth.

Adedipe however said analysts believe that the country would achieve a 2.1 per cent growth in 2021. “I am of the opinion that we can do much better.

He argued that a critical part of the informal sector is serviced by the over 900 microfinance banks in the country, “a number of these banks have had over 15 years of successful operations, and the government must consider integrating these banks in connecting finance to the bottom of the pyramid. These will get intervention where it matters and bring rapidity to the result.”