Nigeria received the worst possible news from its statistics bureau on Wednesday. The economy is officially in a recession, with the second quarter 2016 Gross Domestic Product (GDP) decline of -2.06 percent confirming what has been an open secret for some time. Annual inflation accelerated to 17.1 percent in July from 16.5 percent in June, and food inflation accelerated to 15.8 percent from 15.3 percent, according to the data from the National Bureau of Statistics (NBS).
The federal government is however looking at the cup as half full.
A statement from the office of the vice president, who heads the Economic Management Team (EMT), described the recession as a “temporary decline,” but pointed out that there were reasons to hope.
“Besides the growth recorded in the agriculture and solid mineral sectors, the Nigerian economy in response to the policies of the Buhari presidency is also doing better than what the IMF had estimated with clear indications that the second half of the year would be even much better,” said Dr. Adeyemi Dipeolu, the Special Adviser to the President on Economic Matters.
The presidency said that even though the decline was mostly due to the contraction in the oil sector, there was growth in the agricultural (4.53 percent against 3.09 percent in Q2) and solid minerals sectors which are the areas in which the Federal Government has placed particular priority.
“The data already shows a reduction in imports and an increase in local produced goods and services and this process will be maintained although it will start off slowly in these initial stages before picking up later.
“The inflation rate remains high but the good news is that the month-on-month rate of increase has fallen continuously over the past three months.
“Unemployment remains stubbornly high which is usually the case during growth slowdowns and for reasons of a structural nature,” the statement said.
He further said that “the areas given priority by the Federal Government are beginning to respond with understandable time lags to policy initiatives. Indeed, as the emphasis on capital expenditure begins to yield results and the investment/GDP numbers increase, the growth rate of the Nigerian economy is likely to improve further.
“The IMF had forecasted a growth of -1.8% for 2016, however the economy is performing better than the IMF estimates so far. For the half year it stands at -1.23% compared to an average of -1.80% expected on average by the IMF.
“What is more, it is likely the second half will be better than the first half of 2016. This is because many of the challenges faced in the first half either no longer exist or have eased.”