Nigeria’s economy shrank by an annualised 6.1 percent in the second
quarter of 2020, the statistics agency said Monday, owing to low oil
prices and effects from the coronavirus.
Economic activity in Africa’s largest producer of crude oil had expanded
by 1.87 percent in the first quarter, compared with the same period a
year earlier, the National Bureau of Statistics (NBS) said in a report.
Nigeria, which relies on the oil sector for 70 percent of government
revenue and 90 percent of its foreign exchange earnings, has seen oil
output and revenue battered by the coronavirus pandemic.
Like many others, the government had to impose nationwide lockdowns to
contain the spread of the virus.
“The decline was largely attributable to significantly lower levels of
both domestic and international economic activity during the quarter,
which resulted from nationwide shutdown efforts aimed at containing the
COVID-19 pandemic,” an NBS statement said.
Oil production stood at 1.81 million barrels per day in the second
quarter, compared with 1.98 mbpd in the same period of 2019, it added.
Activity in non-oil sectors fell on average by 6.05 percent, the first
such decline in nearly three years.
Nigeria emerged from its first recession in more than two decades in
2016, but the economy has been struggling to fully recover ever since.
Inflation has risen to 12.8 percent, its highest level in more than two
years, while unemployment currently stands at 27 percent, up from 23
percent in 2018.
The government has revised its 2020 budget, reduced its oil benchmark
price to $28 per barrel from $57 and obtained several loans to help cope
with the drop in revenue.
Nigeria has also cut its crude output in line with Organization of
Petroleum Exporting Countries (OPEC) efforts to strengthen the oil
market.
The Capital Economics consulting group did not see any immediate relief
for the battered economy.
“Looking ahead, we suspect that Nigeria’s recovery will be weak. OPEC
production quotas will continue to weigh on the oil sector, especially
if Nigeria bows to pressure from other members of the cartel to make
compensatory cuts for overproduction in previous months,” it said.