The Buhari administration welcomes news of Nigeria's exit
from recession with cautious optimism and will continue to drive Nigeria's
economic growth by vigorously implementing the Economic Recovery & Growth
Plan launched earlier this year by President Muhammadu Buhari.
The overall economic plan and direction of the
administration has resulted, among others, in sustained restoration of oil
production levels, (occasioned by the enhanced security and stability in the
Niger Delta) sustained growth in
agriculture, mining and the first growth recorded in industry as a whole in the
last nine quarters since Q4 2014.
BELOW IS A STATEMENT BY SPECIAL ADVISER ON ECONOMIC ADVISER
TO THE PRESIDENT, DR. ADEYEMI DIPEOLU ON THE 2ND QUARTER 2017 FIGURES JUST
RELEASED BY THE NATIONAL BUREAU OF STATISTICS
"The figures released by the National Bureau of
Statistics for the second quarter of this year (Q2 2017) show that the economy
grew in Q2 2017 by 0.55% from -0.91% in Q1 2017 and -1.49% in Q2 2016. This in effect means that the Nigerian
economy has exited recession after five successive quarters of contraction.
This positive growth is attributable to both the oil and
non-oil sectors of the economy. Growth
in the oil sector which has been negative since Q4 2015 was positive in Q2
2017. It rose by 1.64% as compared to
-15.60 in Q1 2017, an increase of up to 17 percentage points. This improvement is partly due to the fact
that oil prices which have improved slightly from the lows of last year have
been relatively steady as well as the fact that production levels were being
restored.
The non-oil sector grew by 0.45% in Q2 2017, a second
successive quarterly growth after growing 0.72% in Q1 2017. This increase which was not quite as strong
as it was in Q2 2016 reflects continuing fragility of economic conditions. However, given that nearly 60% of the non-oil
sectors contribution to GDP is influenced by the oil sector, growth in the oil
sector will help boost the rest of the economy.
The positive growth seen in agriculture when the rest of the
economy was contracting was maintained at 3.01% which is encouraging especially
if seasonal factors are taken into account.
Manufacturing growth was also positive at 0.64% and although lower than
the previous quarter’s growth of 1.36%, it was an a noticeable improvement over
the -3.36% experienced in Q2 2016 and a continuation of the turnaround of the
sector. Solid minerals which remain a
priority of the Administration also continued to grow and in Q2 2016 by 2.24%.
Overall, industry as a whole grew by 1.45% in Q2 2017 after
nine successive quarters of contraction starting in Q4 2014. This positive development was somewhat
overshadowed by the continued decline in the services sector which accounts for
53.7% of GDP. Nevertheless, electricity
and gas as well as financial institutions grew by 35.5% and 11.78% respectively
in Q2 2017.
The GDP figures give grounds for cautious optimism
especially as inflation has continued to fall from 18.72% in January 2017 to
16.05% in July 2017. Foreign exchange
reserves have similarly improved from a low of $24.53 in September 2016 to
about $31 billion in August 2017. In the
same vein capital importation grew by 95% year-on-year driven by portfolio and
other investments but also notably by foreign direct investment which increased
by almost 30% over the previous quarter.
Foreign trade has also contributed to improving economic
conditions with exports amounting to N3.1 trillion in Q2 2017 while imports
which increased by 13.5% amounted to N2.5 trillion in the same period. The overall trade balance thus remained
positive at N0.60 trillion.
Unemployment however remains relatively high but job
creation is expected to improve as businesses and employers increasingly
respond more positively to the significantly improving business environment and
favorable economic outlook.
Besides, as key sectoral reforms in both oil and non-oil
sectors gain traction, the successful implementation of ERGP initiatives such
as N-Power and the social housing scheme will boost job creation.
Food inflation also bears watching as it has remained quite
high and volatile due mostly to high transport costs and seasonal factors such
as the planting season. Investments in road and rail infrastructures, increased
supply and availability of fertilizers and improvements in the business
environment should contribute to the easing of food prices.
Overall, the end of the recession is welcome but economic
growth remains fragile and vulnerable to exogenous shocks or policy
slippages. Accordingly, it remains
essential to intensify efforts going forward on the implementation of the ERGP
to achieve desired outcomes including sustained inclusive growth, further
diversification of the economy, creation of jobs and improved business
conditions."
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