Data from the National Bureau of Statisitics (NBS) has shown that the Nigerian economy declined 3.6 per cent in the third quarter of the year, compared with a 6.1 percent contraction in the previous quarter, leading the economy to its second recession in five years, according to the latest
However, the Managing Director, Chief Economist, Africa and Middle East Global Research Standard Chartered Bank, Razia Khan said the country’s recession should be viewed as reacting to global economic factors.
According to Khan, the advent of the Coronavirus pandemic has impacted different economies at the same time while the deadly disease impact on global oil prices and production significantly affected Nigeria and other commodity dependent countries.
The economist in an email response to Global Financial Digest said it would be difficult to call what the latest data from the country’s National Bureau of Statistics (NBS) would mean to the Central Bank of Nigeria (CBN) monetriasts at the Monday and Tuesday’s meeting.
Nigeria’s recession needs to be seen in terms of global factors – both the Covid-crisis, which is impacting many different economies at the same time and the impact of Covid on oil, which has necessitated production cuts. Both were factors in the contraction of GDP in Q3 2020,” Khan wrote in the email.
On what would be the response of the CBN to the latest GDP data, Khan said; “Calling what this might mean for the CBN is more difficult.
“While the MPC cut interest rates and widened the corridor around the MPR at its September meeting, in order to bring policy rates closer in line with market interest rates, since then market interest rates have declined even further.
“The acceleration of inflation, albeit driven by food prices, is the complicating factor. So it has become very difficult to call what the MPC might do (we had favoured a further cut; that view is now under review),” Khan said.
However, the Lagos Chamber of Commerce and Industry (LCCI) Director General Muda Yusuf said the country’s economic “recession could linger all through the fourth quarter of this year.”
“Regrettably, the #EnSARS crisis may perpetuate the recession into the fourth quarter. The protests and the destruction that followed was a major setback for our economic recovery prospects.
“From an economic perspective, 2020 has been a very bad year. The worst in recent history. We are faced with the double jeopardy of a stumbling economy and spiraling inflation.
“The October inflation numbers of 14.23 per cent was the highest in 10 months. In economic parlance, this condition is characterised as stagflation. The effects of these developments are evident in business and in households,” Yusuf said.