Nigeria’s economy shrank by an annualised 6.1 percent in the second quarter of 2020, the statistics agency said Monday, owing to low oil prices and effects from the coronavirus.
Economic activity in Africa’s largest producer of crude oil had expanded by 1.87 percent in the first quarter, compared with the same period a year earlier, the National Bureau of Statistics (NBS) said in a report.
Nigeria, which relies on the oil sector for 70 percent of government revenue and 90 percent of its foreign exchange earnings, has seen oil output and revenue battered by the coronavirus pandemic.
Like many others, the government had to impose nationwide lockdowns to contain the spread of the virus.
“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,” an NBS statement said.
Oil production stood at 1.81 million barrels per day in the second quarter, compared with 1.98 mbpd in the same period of 2019, it added.
Activity in non-oil sectors fell on average by 6.05 percent, the first such decline in nearly three years.
Nigeria emerged from its first recession in more than two decades in 2016, but the economy has been struggling to fully recover ever since.
Inflation has risen to 12.8 percent, its highest level in more than two years, while unemployment currently stands at 27 percent, up from 23 percent in 2018.
The government has revised its 2020 budget, reduced its oil benchmark price to $28 per barrel from $57 and obtained several loans to help cope with the drop in revenue.
Nigeria has also cut its crude output in line with Organization of Petroleum Exporting Countries (OPEC) efforts to strengthen the oil market.
The Capital Economics consulting group did not see any immediate relief for the battered economy.
“Looking ahead, we suspect that Nigeria’s recovery will be weak. OPEC production quotas will continue to weigh on the oil sector, especially if Nigeria bows to pressure from other members of the cartel to make compensatory cuts for overproduction in previous months,” it said.
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