On Friday, the National Bureau of Statistics (NBS) revealed, through its quarterly report on the economy, that the Gross Domestic Product (GDP) of Nigeria contracted by -0.36 percent. This information suggests that the economy is headed for a recession as the second quarter is also projected to be worse off.

This decline is as a result of the poor economic situation of the country coupled with the fall in global oil prices. Nigeria, which used to be 70 percent dependent on oil as its major source of revenue, has been hit badly by the fall in oil prices. In order to save the country’s currency (Naira) and the economy, the government put stringent monetary policies in place. So far this hasn’t yielded any positive results and Nigeria’s president is opposed to calls for devaluation made by investors, experts and stakeholders in Nigeria.

If the country goes into recession, here are five things that could happen:

Slump in the market – People would find it difficult to buy goods and services as their purchasing power will be reduced due to unemployment. This will invariably lead to a slump in the market as producers will produce less, meaning less profits for producers.

Fall in Stock price – Several investments would suffer as a result of this because investors will avoid investing in companies that might be at a risk of suffering losses during this period.

Companies closing down: While bigger companies may be able to withstand the crisis, several small companies will be forced to shut down as they will be making less profit.

Increase in unemployment – During a recession, the number of unemployed people would increase as firms go bankrupt. As a result of this bankruptcy, some companies will be forced to downsize. This is already happening in Nigeria. Several companies are laying off staff as a result of the current economic situation on the country. According to the recent report on unemployment released by the National Bureau of Statistics, the number of unemployed people in the country has increased to over 1.45 million.

Increase in national debt – During recessions the government is usually forced to divert tax payers money meant for development to bailing out companies that cannot survive on their own.

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