President Muhammadu Buhari on Thursday said the country’s economy may slip back into another recession in the third quarter of 2020.
“GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences,” Buhari said while presenting the N13.1 trillion budget for 2021 with a deficit of N4.8 trillion that will be financed mainly by borrowing.
“However, we are working assiduously to ensure rapid recovery in 2021. We remain committed to implementing programmes to lift 100 million Nigerians out of poverty over the next 10 years,” he added
Buhari said the Nigerian economy is currently facing challenges with the macroeconomic environment being significantly disrupted by the coronavirus pandemic.
“Real Gross Domestic Product (‘GDP’) growth declined by 6.1 per cent in the second quarter of 2020. This ended the 3-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017,” the president said.
Nigeria’s finance minister Zainab Ahmed also shared the same sentiment in August 2020.
Ahmed said unless Nigeria achieves a very strong third quarter 2020 economic performance, the country may slide into recession.
“Nigeria is exposed to spikes in risk aversion in the global capital market, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market,” the minister said.
“Nigeria’s Q2 GDP growth is in all likelihood negative and unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into a second recession in four years with significant adverse consequences.”
The World Bank also predicted that the collapse in oil prices coupled with the COVID-19 pandemic is expected to plunge the Nigerian economy into a severe economic recession, the worst since the 1980s.
The bank said the report indicated that Nigeria in Times of COVID-19: Laying Foundations for a Strong Recovery, estimated that the country’s economy would likely contract by 3.2 per cent in 2020.
It stated that this projection assumed that the spread of COVID-19 in Nigeria would be contained by the third quarter of 2020.
“The macroeconomic impact of the COVID-19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus.
“Oil represents more than 80 per cent of Nigeria’s exports, 30 per cent of its banking-sector credit, and 50 per cent of the overall government revenue.
“With the drop in oil prices, government revenues are expected to fall from an already low eight per cent of GDP in 2019 to a projected five per cent in 2020.
“This comes at a time when fiscal resources are urgently needed to contain the COVID-19 outbreak and stimulate the economy.”
