Renowned economist and a member of the federal government’s economic advisory council, Bismarck Rewane, has said that Nigeria needs to do things differently to combat challenges thrown up by inflation, unemployment, weak currency, and looming recession.
Mr Rewane said this while featuring on a Channels Television talk programme on Monday.
He spoke against the backdrop of a report by the National Bureau of Statistics (NBS), which revealed that Nigeria’s economy contracted by 6.10 per cent in the second quarter of 2020.
The report has thrown up concerns over the possibility of Nigeria’s descent into yet another recession.
“The first variable we are looking at is recession, negative growth,” Mr Rewane said. “The second variable is high inflation, which is almost 13 per cent.
“The third variable is high unemployment; even though the unemployment numbers are at 28 per cent, we think that it is much more than that. And finally, we have weaknesses in currency.
“So we are having external weaknesses and vulnerabilities, slow growth, high unemployment, and more than anything else, contraction in economic activity.
“Now we are going to move away from the monetary policy complement that we have, stimulate the economy with greater catalysts, and do some things differently.”
On Monday, the NBS said that oil Gross Domestic Product (GDP) contracted by 6.63 per cent from an increase of 5.06 per cent and 5.15 per cent in the first and second quarters of 2019. On the other hand, non-oil GDP contracted by 6.05 per cent from an increase of 1.55 per cent in the first quarter of 2020 and 1.64 per cent in the second quarter of 2019.
“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,” the bureau said.
Mr Rewane in his submission argued that the NBS report was concerning, but not quite alarming at this period, adding that the Nigerian government’s stimulus plan for the economy was inadequate to cover for the shortfall recorded.
“The truth is that the economy had its pre-existing conditions in Q1 and the lag between the slow down and the contraction was underestimated by all analysts,” Mr Rewane said.
“We have N2.5 trillion equipment to fight a 12 trillion contraction, so the limitations and inadequacies and inappropriateness of the tools, compared to the problem we have, is stacked.
“So we are saying that the move from a slowdown into a contraction was more than we expected. The tools that we have at our disposal are inadequate. The stimulus that is required to take us out of this equation is going to be much more than we expected. And we are going to have to take some measures.”
With the contraction in GDP, experts have opined that Nigeria may slide into a second recession in four years.
The Nigerian economy effectively slid into recession in August 2016, after the economy contracted for two consecutive quarters amid depleting oil revenues. The development resulted in the decline of the second quarter 2016 GDP by 2.06 per cent.
Annual inflation also rose to 17.1 per cent in July from 16.5 per cent in June 2016, while food inflation rose to 15.8 per cent from 15.3, the NBS said at the time.
Nigeria however slipped out of recession in the second quarter of 2017, after the prices of oil appreciated in the global oil market.
A country’s economy is said to have slid into recession when its GDP contracts for two consecutive quarters.
In 2018, the Monetary Policy Committee of the Nigerian Central Bank warned that Nigeria’s economy risked slipping into another recession if there was no synergy between monetary and fiscal policies of the government.