The Federal Government yesterday expressed excitement that the country had exited recession but viewed the development with “cautious optimism’’.
The government was reacting to the figures released by the National Bureau of Statistics (NBS) for the second quarter of this year (Q2 2017).
The NBS figures showed that the economy grew in Q2 2017 by 0.55 per cent from -0.91 per cent in Q1 2017 and -1.49 per cent in Q2 2016.
“This in effect means that the Nigerian economy has exited recession after five successive quarters of contraction,’’ the Special Adviser on Economic Affairs to the President, Dr Adeyemi Dipeolu, explained in a statement.
According to him, the administration will continue to drive Nigeria’s economic growth by vigorously implementing the Economic Recovery and Growth Plan (ERGP) launched earlier this year by President Muhammadu Buhari.
He noted that the overall economic plan and direction of the administration has resulted, among others, in sustained restoration of oil production levels, (occasioned by the enhanced security and stability in the Niger Delta).
He also noted the sustained growth in agriculture, mining and the first growth recorded in industry as a whole in the last nine quarters since Q4 2014.
The adviser attributed the positive growth to both the oil and non-oil sectors of the economy, noting that growth in the oil sector which was negative since Q4 2015 turned positive in Q2 2017.
He said the sector rose by 1.64 per cent as compared to -15.60 per cent in Q1 2017, an increase of up to 17 percentage points.
“This improvement is partly due to the fact that oil prices, which have improved slightly from the lows of last year, have been relatively steady as well as the fact that production levels were being restored.
“The non-oil sector grew by 0.45 per cent in Q2 2017, a second successive quarterly growth after growing 0.72 per cent in Q1 2017.
“This increase, which was not quite as strong as it was in Q2 2016, reflects continuing fragility of economic conditions,’’ Dipeolu stated.
He, however, observed that given that nearly 60 per cent of the non-oil sectors contribution to GDP was influenced by the oil sector, growth in the oil sector would help boost the rest of the economy.
The SA stated that the positive growth seen in agriculture, when the rest of the economy was contracting, was maintained at 3.01 per cent which was encouraging, especially if seasonal factors were taken into account.
He said manufacturing growth was also positive at 0.64 per cent and although lower than the previous quarter’s growth of 1.36 per cent.
Dipeolu added that solid minerals, which remained a priority of the administration, also continued to grow and in Q2 2016 by 2.24 per cent.
He noted that overall, industry as a whole grew by 1.45 per cent in Q2 2017 after nine successive quarters of contraction starting in Q4 2014.
“This positive development was somewhat overshadowed by the continued decline in the services sector which accounts for 53.7 per cent of GDP.
“Nevertheless, electricity and gas as well as financial institutions grew by 35.5 per cent and 11.78 per cent respectively in Q2 2017.
“The GDP figures give grounds for cautious optimism, especially as inflation has continued to fall from 18.72 per cent in January 2017, to 16.05 per cent in July 2017, the Presidential aide said.
He observed that foreign exchange reserves improved from a low of $24.53 billion in September 2016 to about $31 billion in August 2017 while capital importation grew by 95 per cent year-on-year driven by portfolio and other investments.
He added that capital importation was raised by Foreign Direct Investment which increased by almost 30 per cent over the previous quarter.
“Foreign trade has also contributed to improving economic conditions with exports amounting to N3.1 trillion in Q2 2017 while imports, which increased by 13.5 per cent, amounted to N2.5 trillion in the same period.
“The overall trade balance thus remained positive at N0.60 trillion.’’
Dipeolu observed, however, that unemployment remained relatively high but job creation was expected to improve as businesses and employers increasingly responded more positively to the improving business environment and favorable economic outlook.
“Besides, as key sectoral reforms in both oil and non-oil sectors gain traction, the successful implementation of ERGP initiatives such as N-Power and the social housing scheme will boost job creation.
“Food inflation also bears watching as it has remained quite high and volatile due mostly to high transport costs and seasonal factors such as the planting season.
“Investments in road and rail infrastructure, increased supply and availability of fertilisers and improvements in the business environment should contribute to the easing of food prices,’’ he said.
Dipeolu said that the end of the recession was welcome but economic growth remained fragile and vulnerable to exogenous shocks or policy slippages.
Accordingly, he said it was essential to intensify efforts going forward on the implementation of the ERGP.
This, he said, would achieve desired outcomes, including sustained inclusive growth, further diversification of the economy, creation of jobs and improved business conditions.
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