Nigeria’s economy shrank by an annualized 6.1% in the 2nd quarter of 2020, the statistics agency said on Monday, August 24, owing to low oil prices and effects from the coronavirus.
Economic activity in Africa's largest producer of crude oil had expanded by 1.87% in the 1st quarter, compared with the same period a year earlier, the National Bureau of Statistics (NBS) said in a report.
Nigeria, which relies on the oil sector for 70% of government revenue and 90% of its foreign exchange earnings, has seen oil output and revenue battered by the coronavirus pandemic.
Like many others, the government had to impose nationwide lockdowns to contain the spread of the virus.
"The decline was largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic," an NBS statement said.
Oil production stood at 1.81 million barrels per day (mbpd) in the 2nd quarter, compared with 1.98 mbpd in the same period of 2019, it added.
Activity in non-oil sectors fell on average by 6.05%, the first such decline in nearly 3 years.
Nigeria emerged from its first recession in more than two decades in 2016, but the economy has been struggling to fully recover ever since.
Inflation has risen to 12.8%, its highest level in more than two years, while unemployment currently stands at 27%, up from 23% in 2018.
The government has revised its 2020 budget, reduced its oil benchmark price to $28 per barrel from $57, and obtained several loans to help cope with the drop in revenue.
Nigeria has also cut its crude output in line with Organization of the Petroleum Exporting Countries (OPEC) efforts to strengthen the oil market.
The Capital Economics consulting group did not see any immediate relief for the battered economy.
"Looking ahead, we suspect that Nigeria’s recovery will be weak. OPEC production quotas will continue to weigh on the oil sector, especially if Nigeria bows to pressure from other members of the cartel to make compensatory cuts for overproduction in previous months," it said. – Rappler.com