COVID-19 finally lays fangs on Nigeria’s GDP as economy contracts -6.10 to N15.89trn in Q2

Moses Obajemu & Charles Abuede

Dwindling domestic and international economic activities caused the Nigerian economy and the gross domestic product (GDP) to shrink by 6.10 percent in the second quarter of 2020.

Nigeria’s Gross Domestic Product (GDP) contracted by –6.10 per cent (year-on-year) in real terms during the second quarter of 2020, as a result of the COVID-19 which brought about low levels of economic activity in Africa’s largest economy.

The GDP  report of the National Bureau of Statistics, for Q2 2020, released on Monday said the decline resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.

The data from the Abuja based statistics bureau revealed that aggregate GDP in the second quarter stood at N15.89 trillion in Q2’2020, down from N16.74 trillion in Q1’2020 in real terms, and N34.02 trillion in nominal terms, down from N35.65 trillion in Q1’2020.

This current figure of N15.89 trillion is -2.8 per cent lower than the 2.11 per cent growth recorded in the corresponding quarter of 2019 which recorded an aggregate of N35.0 trillion in nominal terms. On a quarter on quarter comparison, Nigeria’s real GDP decreased by –5.04 per cent.

“Gross Domestic Product decreased by –6.10 per cent (year-on-year) in real terms in the second quarter of 2020, ending the three-year trend of low but positive real growth rates recorded since the 2016/17 recession,” the NBS said.

In comparison with the Q2 2019, which recorded a growth of 2.12 per cent, the Q2 2020 growth rate recorded a decline of 8.22 per cent, and a fall of 7.97 per cent when compared to the first quarter of 2020 (1.87 per cent).

The report said as a result for the first half of 2020, real GDP declined by –2.18 per cent year on year, compared with 2.11 per cent recorded in the first half of 2019. Quarter on quarter, real GDP decreased by –5.04 per cent. Furthermore, only 13 activities recorded positive real growth compared to 30 in the preceding quarter,” it added.

The Nigerian economy, which emerged from its first recession in 25 years in the second quarter of 2017 when it posted a 0.7 per cent growth, had continued its slow recovery since then.

With another negative growth rate likely in Q3 2020, the economy will slide into its second recession in four years.

In a breakdown of sectorial performance, the oil sector contributed 8.93 per cent to total real GDP in Q2 2020, down from figures recorded in the corresponding period of 2019 and the preceding quarter, where it contributed 8.98 per cent and 9.50 per cent respectively. However, the real growth of the oil sector was on the negative (–6.63) per cent year-on-year during the period under review indicating a –13.80 per cent points decrease relative to the rate recorded in the corresponding period of 2019; as growth in the sector decreased by –11.69 per cent points when compared to Q1 2020 which recorded 5.06 per cent growth.

On the other hand, the non-oil sector recorded the first decline since Q3 of 2017, as the sector shrank by –6.05 per cent in real terms during the reference quarter. Also, the growth rate recorded was –7.70 per cent points lower when compared to Q2 2019 and –7.60 per cent points when compared to the first quarter of 2020.

The non-oil sector output was driven by financial and insurance, telecommunications, crop production, and public administration, while transport and storage, accommodation and food services, construction, education, real estate and trade, among others, experienced the highest negative growth during the quarter.

The GDP statistics also show that the non-oil sector contributed 91.07 per cent of the total GDP in real terms during the second quarter of 2020. The figure was slightly higher than the share recorded in the second quarter of 2019 (91.02%), as well as the first quarter of 2020 (90.50%), with only 13 activities recording positive real growth compared to 30 in the preceding quarter.