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Nigeria Stuck in Painful Recession
Nigeria Stuck in Painful Recession

Nigeria Stuck in Painful Recession

Nigeria Stuck in Painful Recession

Africa’s biggest economy Nigeria is stuck in a painful recession with no end in sight, according to the latest official data released on Monday.
Gross domestic product shrank by 2.24% in the third quarter of 2016, following a 2.06% contraction in the second quarter, and a 0.36% shrinking in the first quarter, according to data released by the country’s National Bureau of Statistics, Business Insider reported.
That extends the country’s recession, which started in Q2, into a third quarter. Nigeria’s ongoing recession is its first in 20 years. The continued recession is even deeper than expected, with economists polled by Bloomberg in the run-up to the data’s release forecasting a contraction of just 2%.
The big driver of the slump in the Nigerian economy, which was one of Africa’s great success stories until recently, has been the persistently low price of oil over the past 2 1/2 years.
Nigeria relies heavily on oil and is the largest producer of the commodity on the continent, producing roughly 2.4 million barrels a day. Given that the price of oil has slumped from more than $100 a barrel in 2014 to roughly $48 now, it is perhaps unsurprising that the country has struggled to find economic growth.
The Nigerian oil industry’s problems have been made even worse by a series of major disruptions in the oil-rich Niger Delta area, caused largely by a militant group calling itself the Niger Delta Avengers. Most notably, the group attacked a Chevron offshore facility in May and the underwater Forcados export pipeline operated by Shell in late March. The production disruptions caused by these attacks and others have wreaked havoc with the already stricken industry.
The mining sector has also been a big issue for the country’s economy. Output was more than 20% lower than in the same period in 2015, the Nigerian National Bureau of Statistics said:
 “In real terms, mining and quarrying sector slowed by 21.64% (year-on-year) in the third quarter of 2016 which was 22.77% points lower than rates recorded in the same quarter of 2015, also 4.45% points lower than rates recorded in second quarter of 2016.
The contribution of mining and quarrying to real GDP in the third quarter of 2016 stood at 8.34%, showing a decline of 2.06% points relative to the corresponding quarter of 2015 and also a decline of 0.07% points relative to the second quarter of 2016.”

 

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