Economic analysts have said that Nigeria is expected to go back into recession in 2020 and added that recovery next year will likely be weak.
This was even as they said the nation’s economy might contract by -3 per cent at the end of the year.
Speaking during a virtual interaction with newsmen in Lagos yesterday, Senior Economist, FBNQuest Capital Research, Chinwe Egwim, said that judging from the latest data from the National Bureau of Statistics (NBS), Nigeria will have a recession in 2020 and a weak recovery next year. “The latest data from the NBS show that GDP contracted by -6.1 per cent year-on-year ( y/y) in Q2. The oil economy contracted by – 6.6 per cent y/y while the non-oil economy contracted by -6.1 per cent y/y. Headline inflation currently at 12.82 per cent while food price inflation rose by 15.18 per cent y/y to 15.48 per cent.
Alongside enhanced credit availability, the Federal Government’s proposed spending and its borrowing plans provide a little comfort for the macro story. We think spending will be trimmed in the likely event that revenue collection falls short of the heady target set, which the FG projects N10.8 trillion even as its capacity to prime the pump is substantially lower than that of its peer governments in emerging market (EM)”, she said.
According to her, the prospects for GDP might be in form of a double digit contraction in the oil economy in 2020.
“However, when the population is growing at up to 3 per cent annually and in the absence of a nationwide famine, it is difficult to see more than a token contraction in agriculture. In the non-oil, non-agriculture economy, which represents about two thirds of GDP and there are sectors that should perform reasonably in current circumstances (information and communications) alongside the strugglers (real estate, public administration and education) and the unpredictable (finance and insurance). We therefore have the economy contracting at a little more than -3 per cent this year”.
On the outlook for the oil and gas industry, Research Analyst, FBNQuest, Tunde Abidoye, said, given the volatile environment, cuts and deferment of capital expenditure plans and firms are expected to pursue operating expenses cuts in line with government directives.