Leading economic indicators highlight factors which suggest Nigeria is likely to post 1 percent negative growth in the first quarter of this year.
The indicator revealed Nigeria may be faced with economic recession if the situation is not properly contained. This development has mostly been attributed to the global economic slowdown, NSE market capitalization, FBN manufacturing index, inflation, global fall in price of oil, among others.
An analysis of Nigeria’s economic indicators has shown that there is cause to worry as they point to the possibility of an economic recession. Last year, the level of business confidence in Nigeria stood at 8.3 percent, while consumer confidence dropped to -3 from -1.9 recorded in the previous quarter.
Also, latest statistics on The country’s Gross Domestic Product (GDP) growth rate show that the economy grew at 9.19 percent by the end of September last year from 2.57 percent recorded in the previous quarter. The projections indicated that the value of total trade is expected to reduce in 2016, increasing by only 2.41 percent as a result of moderations in imports and exports.
Allocation from the Federation Account available for sharing this month by the tiers of government reduced by N17.38 billion compared to what was distributed last year. The allocation for December last year was N387.77 billion, compared to N370.38 billion shared in January 2016.
The report also predicted a rise in the inflation rate from the current 9.6 percent to 10.16 percent in this year. Furthermore, Nigeria’s manufacturing production rate dropped to -0.3 per cent at the second quarter of last year from -0.7 per cent recorded the previous quarter.
While the Dollar remains the king of the foreign exchange market, the value of the Naira has been fluctuating against it. The current state of the international currency market and the widening gap between the parallel market and the inter-bank rate is a cause for worry despite the frantic efforts of the Central Bank of Nigeria (CBN).
On a ‘brighter’ note, all hope does not necessarily have to be lost in the event of a looming recession crisis. Nigeria’s economy growth is expected to increase to 3.78 percent from 2.97 percent and yearly growth by an average of 5.41 percent between 2017 and 2019. Meanwhile, beyond 2016, both imports and exports are expected to increase and total merchandise trade is expected to average 15.61 percent growth during this period.
Economic growth is expected to be recorded as infrastructure developments take shape and provide support for both the oil and non-oil sectors. However, failure to have the proper plans in place to tackle issues such as the crude oil price drop, fall of the Naira and struggles in other sectors could contribute to placing the Nigerian economy in a likely recession.
