National Bureau of Statistics (NBS) said that the nation’s economy has formally entered into recession as the Gross Domestic Product (GDP) contracted for the second consecutive quarter by 3.62 percent in the third quarter of 2020.
Economic recession is defined as two consecutive quarters of negative Gross Domestic Product (GDP) growth. A negative GDP growth is also referred to as a contraction.
The National Bureau of Statistics, NBS, in its GDP report for Q3’ 2020 said that the nation recorded GDP growth of -3.62% in Q3’ 2020, though an improvement from the -6.10% growth recorded in Q2’2020.
The NBS stated: “Nigeria’s gross domestic product (GDP) recorded a growth rate of –3.62% (year-on-year) in real terms in the third quarter of 2020.
“Cumulatively, the economy has contracted by -2.48%. While this represents an improvement of 2.48% points over the –6.10% growth rate recorded in the preceding quarter (Q2 2020), it also indicates that two consecutive quarters of negative growth have been recorded in 2020.”
The NBS further stated: “Furthermore, growth in Q3 2020 was slower by 5.90% points when compared to the third quarter of 2019 which recorded a real growth rate of 2.28% year on year.
“The performance of the economy in Q3 2020 reflected residual effects of the restrictions to movement and economic activity implemented across the country in early Q2 in response to the COVID-19 pandemic.
“As these restrictions were lifted, businesses re-opened and international travel and trading activities resumed, some economic activities have returned to positive growth. A total of 18 economic activities recorded positive growth in Q3 2020, compared to 13 activities in Q2 2020.”
The NBS further explained that, “During the quarter under review, aggregate GDP stood at N39.089 trillion in nominal terms. This performance was 3.39% higher when compared to the third quarter of 2019 which recorded an aggregate of N37.806 trillion.
“This rate was, however, lower relative to growth recorded in the third quarter of 2019 by –9.91% points but higher than the proceeding quarter by 6.19% points. For clarity, the Nigerian economy has been broadly classified into the oil and non-oil sectors.”
On the performance of the oil sector, the NBS said: “The average daily oil production recorded in the third quarter of 2020 stood at 1.67 million barrels per day (mbpd), or 0.37mbpd lower than the average production recorded in the same quarter of 2019 and 0.14mbpd lower than production volume recorded in the second quarter of 2020
“Real growth for the oil sector was –13.89% (year-on-year) in Q3 2020, indicating a sharp contraction of –20.38% points relative to the rate recorded in the corresponding quarter of 2019.
Furthermore, real oil growth decreased by –7.26% points when compared with oil sector growth recorded in Q2 2020 (6.63%). Quarter on quarter, however, the oil sector recorded a growth rate of 9.64% in Q3 2020. The sector contributed 8.73% to total real GDP in Q3 2020, down from 9.77% and 8.93% respectively recorded in the corresponding period of 2019 and the preceding quarter, Q2 2020.”
On the performance of the Non-oil sector, the NBS stated: “The non-oil sector grew by –2.51% in real terms during the reference quarter, which is –4.36% points lower than the rate recorded in Q3 2019 but 3.54% points higher than in the second quarter of 2020.
The non-oil sector was driven mainly by Information and Communication (Telecommunications), with other drivers being Agriculture (Crop Production), Construction, Financial and Insurance (Financial Institutions), and Public Administration. In real terms, the non-oil sector contributed 91.27% to the nation’s GDP in the third quarter of 2020, higher than its share in the third quarter of 2019 (90.23% ) and the second quarter of 2020 (91.07%).”