Nigerian economy officially enters recession

By Rafiu Ajakaye

LAGOS, Nigeria

The Nigerian economy has officially entered a recession as the country's gross domestic product (GDP) shrank by 2.06 percent in the second quarter of 2016, according to a report Wednesday from the Nigerian bureau of statistics.

An economy is said to have entered recession if the GDP contracts over two consecutive quarters. The Nigerian economy had contracted by 0.36 percent in the first quarter.

The report also said headline inflation rose to 17.1 percent in July, up from 16.5 percent recorded in June.

The report said foreign direct investment declined from $174.4 million in the first quarter of 2016 to an estimated $133 million in the second -- a trend economists had blamed on the country's hitherto uncertain foreign exchange policy.

Regardless, the Nigerian government said the report is not entirely a bad news when measured against previous predictions.

“The IMF had forecasted a growth of -1.8% for 2016, however the economy is performing better than the IMF estimates so far. For the half year it stands at -1.23% compared to an average of -1.80% expected on average by the IMF,” Adeyemi Dipeolu, economic adviser to the Nigerian president, said in a statement shortly after the report was released.

He added: “A close look at the data shows that this outcome was mostly due to a sharp contraction in the oil sector due to huge losses of crude oil production as a result of vandalisation [sic] and sabotage.

“However, the rest of the Q2 data is beginning to tell a different story. There was growth in the agricultural and solid minerals sectors which are the areas in which the government has placed particular priority.”