Nigeria, Africa’s Largest Economy, Enters Recession as Oil Prices Dip

Nigeria, Africa’s Largest Economy, Enters Recession as Oil Prices Dip

The Stream - Wednesday August 31, 2016

by AP

LAGOS, Nigeria (AP) -- Africa’s biggest economy is officially in recession.

Nigeria released data on Wednesday showing its gross domestic product declined by 2.06 percent in the second quarter of the year. The oil- and import-dependent economy also declined by 0.36 percent in the first quarter.

Nigeria has been slammed by low petroleum prices, attacks by oil militants and foreign currency shortages.

The bleak data was “mostly due to a sharp contraction in the oil sector due to huge losses of crude production” resulting from vandalism and “sabotage,” an economic adviser to President Muhammadu Buhari, Adeyemi Dipeolu, said in a statement.

The new data from the National Bureau of Statistics put estimated oil production at 1.69 million barrels per day, down by 0.42 million barrels per day from the first quarter.

Nigeria’s non-oil sector also declined by 0.38 percent, and analysts stressed that the country’s problems are broader than oil.

“More important than the headline number is the fact that almost all key sectors of the economy are now struggling,” John Ashbourne, Africa economist at London-based Capital Economics, said in a note distributed Wednesday.

Many of the declines, apart from the oil sector, were due to Nigerian government policy, Ashbourne said.

Buhari was criticized for insisting the Central Bank defend the naira at a fixed rate of 197 to the dollar before finally floating the currency in June.

Ashbourne also cited import restrictions that have harmed manufacturing and foreign exchange policies that have discouraged investment.

The statistics bureau said the $647.1 million of capital imported into Nigeria during the second quarter, a provisional figure, “would be the lowest level of capital imported into the economy on record.”

Ashbourne said that while the economic retraction may ease in the third quarter, it likely will “continue to shrink over the duration of this year.”

 

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