World Economy

Nigeria Economy Slides Into Recession

Nigeria Economy Slides Into Recession  Nigeria Economy Slides Into Recession

The Central Bank of Nigeria reported that economic activities declined faster in June, confirming that the nation’s economy formally entered into recession in the second quarter of the year.

Economic recession is a period of general decline in economic activities and it is typically defined as a decline in GDP for two or more consecutive quarters.

Nigeria’s economy contracted in the first quarter of the year, as it recorded negative gross domestic product during the quarter. According to the National Bureau of Statistics, the nation’s GDP in Q1 2016 contracted by 0.36%, the first negative growth in many years, Vanguard reported.

Indication that the economy suffered contraction in the second quarter, and hence a slide into recession, emerged on Friday, as the CBN’s purchasing manager index for June revealed that economic activities declined faster in June. The decline in June represented decline for six consecutive months.

The report revealed that in the manufacturing sector, “production level, new orders, and employment level and raw material inventories declined at a faster rate; while supplier delivery time improved at a faster rate”. It also stated that in the non-manufacturing sector, “business activity, new orders and employment level declined at faster rate while raw materials inventories declined at a slower rate”, the CBN stated.

“The manufacturing PMI dropped to 41.9 index points in June, compared to 45.8 in the preceding month. This implies that the manufacturing sector declined at a faster rate during the review period.

Of the sixteen manufacturing sub-sectors, fourteen recorded decline in the review month.

“The composite PMI for the non-manufacturing sector recorded decline for the sixth consecutive month. The index dropped to 42.3 points, indicating a faster decline compared to that in May 2016,” it said.

  Naira Depreciates

Last week the naira depreciated against the dollar in all the segments of the foreign exchange market.

At the interbank segment the naira depreciated by N1.36 or 0.19% to N282.5 per dollar from N281.14 the previous week. In the bureaux de change and parallel market segment, naira depreciated by 1.17% or N4 and by 2.9% or N10 respectively.

From N343 per dollar the previous week, the BDC exchange rate rose to N347 per dollar, while the parallel market exchange rate rose from N345 to N355 per dollar.