We will work ‘diligently’ on the economy – Presidency

Hauwa Ali

The Presidency says that although the gross domestic product (GDP) figures released by the NBS in its 2016 second quarter confirmed a temporary decline in the economy, it also indicated “an hopeful expectation in the country’s economic trajectory.”

A statement from the office of the Vice President, Yemi Osinbajo, said beside the growth in the agriculture and solid mineral sectors, the Nigerian economy was doing better than estimates by the International Monetary Fund (IMF).

The Vice President said with the present administration’s policies, there were clear indications the second half of the year would be even much better.

“The Buhari presidency will continue to work diligently on the economy and engage with all stakeholders to ensure that beneficial policy initiatives are actively pursued and the dividends delivered to the Nigerian people,” he said.

In his reaction to the NBS report, Special Adviser to the President on Economic Matters, Adeyemi Dipeolu said “The just recently released data from the National Bureau of Statistics showed that Gross Domestic Product declined by -2.06% in the second quarter of 2016 on a year-on-year basis.

“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 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 Federal Government has placed particular priority.”

Mr.Dipeolu noted, agriculture grew by 4.53 per cent in the second quarter of 2016, compared with 3.09 per cent in the first quarter.

Besides, he said the metal ores sector showed similar performance, with coal mining, quarrying and other minerals also showing positive growth of over 2.5 per cent, while the share of investments in GDP increased to its highest levels since 2010, growing to about 17 per cent of GDP.

Although the manufacturing sector was yet truly out of the woods, the adviser said the sector was beginning to show signs of recovery, with the service sector similar improvement.

The inflation rate remains high but the good news is that the month-on-month rate of increase has fallen continuously over the past three months.

He noted the high unemployment rate, which she said was usually the case during growth slowdowns.

 “The emerging picture, barring unforeseen shocks, is the areas given priority by the Federal Government, are beginning to respond with understandable time lags to policy initiatives,” Mr. Dipeolu said.

“Indeed, as the emphasis on capital expenditure begins to yield results and the investment/GDP numbers increase, the growth rate of the Nigerian economy is likely to improve further,” he said

As these trends continue, he said the outlook for the rest of the year pointed at the Nigerian economy beating the IMF prediction of -1.8% for the full year 2016.

“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.”

A Research Analyst with FXTM, Lukman Otunuga, noted that “while Naira’s vulnerability was highly expected following the official floating foreign exchange policy, external risks, such as a resurgent dollar has accelerated the devaluation of the local currency, consequently pressuring the nation further.

With inflation and unemployment hovering around worrying levels, the CBN has been placed under immense pressure to act, which may weigh on investor sentiment.

While the news of Nigeria entering a recession may be painful, it should be no surprise as the incessant declines in oil prices have punished heavily oil export nations, with Nigeria being no exception,” Mr Otunuga said.