ECONOMY & POLITICSGDP: Expert speculates when economy will recover

 

Following the plunge of Nigeria’s real Gross Domestic Product (GDP) by 6.1%, the chances of an economic recovery have been crippled by some factors.

According to some economic experts, Forex shortages, limited fiscal space and absence of structural reforms are examples of such factors.

While some experts have envisaged economic activity picking up from Q2’s depressed levels as COVID-19 lockdown ease up, Mohamed Abu Basha, Head of Macro Economy, EFG Hermes, explained that the ‘recovery‘ remains crippled by the factors.

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Back story: Nairametrics had reported, on Monday, when Nigeria’s Gross Domestic Product (GDP) in real terms declined by 6.10% (year-on-year) in Q2 2020, thereby ending the 3-year trend of low but positive real growth rates recorded since the 2016/17 recession.

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According to the numbers contained in the GDP report, the performance recorded in Q2 2020 represents a drop of 8.22% points when compared to Q2 2019 (2.12%), and 7.97% points decline when compared to Q1 2020 (1.87%).

Apparently, the significant drop reflects the negative impacts of the disruption caused by COVID-19 pandemic and crash in oil price on the Nigerian economy.

READ: FG expected to spend a record N12.65 trillion for 2021 budget

Road to recovery

Basha said, “We expect GDP contraction to continue in second half of 2020 (2H20); FX shortages will continue to weigh on economic activity, a pressure that has been magnified by limited