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Nigeria’s economic crisis eats deeper
(Nov 22 2016 at 05:20am)An official data showed on Monday that Nigeria’s economic slump sharpened in the third quarter as rebels bombed oil pipelines combined with businessmen struggles in order to access foreign exchange.
The third quarterly fall in a row comes as the West African nation reels from the shock of a crash in global oil prices, which have collapsed from over $100 a barrel in 2014 to currently around half that.
This has now put the Nigerian government under pressure as economists increasingly question whether President Muhammadu Buhari can pull the country out of recession.
“The nation’s gross domestic product (GDP) contracted by -2.24 percent year-on-year in real terms,” the country’s National Bureau of Statistics said in a report.
“During the period under review, oil production averaged at 1.63 million barrels per day (bpd),” the statistics agency said. That is a 22-percent drop from the same period in 2015, when Nigeria was producing 2.17 million bpd.
“Not only do the attacks have an instant impact on output, and cause major damage to infrastructure, but continued unrest will only further discourage international oil companies from investing in oil projects,” Rhidoy Rashid, oil analyst at Energy Aspects, said in a recent note.
“There seems to be no quick fix for uniting a heavily divided region, so for now we expect further attacks and subsequent volatility in Nigerian crude output.”
Manufacturing has also was not left out of the fall, shrinking by 2.9 percent in the third quarter in the wake of a devalued naira and currency controls that have curbed trade.
“This is partly due to the continued fall in the exchange rate, which makes imported inputs more expensive, thereby increasing business costs,” the statistics agency said. “This is greatly a result of the continued fall in (the) naira to dollar rate which translates to much higher cost of business operations.”
“With oil output likely to fall yet again in the fourth quarter, it is too early to call the bottom of Nigeria’s economic downturn,” John Ashbourne, Africa economist at research firm Capital Economics, said in a note. “The bigger picture is that today’s figures suggest that the downtown continued into the third quarter unabated,” Ashbourne added. “Despite government efforts to boost domestic production, the contraction of the manufacturing sector worsened,” he said, adding “erratic policymaking continues to pose a key risk to the economy”.
The International Monetary Fund has forecast the West African nation’s gross domestic product will shrink by 1.7 percent this year, the first full-year contraction in more than two decades.
Source:9jaspot.com
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Last edited 22 Nov 2016