Nigerian economy officially in recession as inflation hits 17.1%

According to latest report released yesterday by the National Bureau of Statistics (NBS), the Nigerian economy is in a recession.

Over a month ago, Finance Minister Mrs. Kemi Adeosun and Central Bank of Nigeria (CBN) Governor Godwin Emefiele, said the economy was in a “technical” recession.

But the figures released yesterday by the NBS confirmed that the economy has slipped into recession after inflation rose for the ninth consecutive month in July.

The figures confirmed the nation’s worst economic recession in over a decade.

According to the figures, Consumer Price Index (CPI) increased last month to 17.1 per cent from 16.5 per cent in June.

The NBS report stated that the CPI, which measured inflation, was 0.6 per cent points higher from the points recorded in June.

The report noted that increases were recorded in all ‘COICOP divisions, which contributed to the headline index, reflecting higher prices across the economy.

It stated: “The pace of the increase in the headline index was however weighed upon by a slower increase in three divisions; health, transport, recreation and culture divisions.

“The onset of the harvest season is yet to have a significant impact on food prices. It is yet to have a significant impact as the Food Sub-index increased by 15.8 per cent (year-on-year) in July, 0.5 per cent points lower from rates recorded in June.

“Prices however increased at a slower pace across a few groups within the food sub-index, namely milk, cheese and eggs; oils and fats; and fruits.’’

The report added that imported foods as reflected by the imported food sub-index increased by 0.4 per cent points from June to 20.5 per cent in July.

It stated that energy and energy-related prices continued to be the largest increases reflected in the core sub-index.

The report further stated: “In July, the core sub-index increased by 16.9 per cent during the month, up by 0.7 per cent points from rates recorded in June (16.2 per cent).

“During the month, the highest increases were seen in the electricity, liquid fuel (kerosene), solid fuels, and fuels and lubricants for personal transport equipment groups.

“Month-on-month, the headline index increased, albeit, at a slower pace, for the second consecutive month in July.

“The index increased by 1.3 per cent in July, 0.4 per cent points from 1.7 per cent recorded in June.’’

The NBS also yesterday said the nation’s Gross Domestic Product (GDP) declines by -2.06 per cent (year-on-year) in the second quarter of 2016.

It said in its GDP Quarterly Report posted on its Website that the figure was lowered by 1.70 per cent points from the growth rate of -0.36 per cent recorded in the preceding quarter.

The Bureau also said that the figure was lowered by 4.41 per cent points from the growth rate of 2.35 per cent recorded in the corresponding quarter of 2015.

According to the bureau, it records an increase of 0.82 per cent quarter on quarter.

It said that the nominal GDP during the quarter was N23.48 trillion at basic prices representing 2.73 per cent higher than the N22.86 recorded in the second quarter 2015.

The NBS said that the growth was lower than the rate recorded in the second quarter of 2015 by 2.44 per cent.

In the period under review, the Bureau put the real growth in the oil sector as 17.48 per cent year-on-year in the second quarter of 2016.

It, however, said that growth declined by 10.68 per cent and recorded 15.59 per cent relative to growth in the second quarter of 2015 and first quarter of 2016 respectively.

The Bureau said that quarter-on-quarter, growth also slowed by -19.11 per cent but as a share of the economy; the oil sector contributed 8.26 per cent to total real GDP.

This, it said, was down from the contribution recorded in the corresponding period of 2015 and the first quarter of 2016 by 1.54 per cent and 2.03 per cent respectively.

The NBS said that growth in the non-oil sector was driven by seven activities from agriculture, information and communication, water supply, arts entertainment and recreation, professional scientific and technical services, education.

It said that other services grew positively, while the remaining 19 major sectors, many of which were substantially indirectly dependent on the oil sector, recorded negative growth.

The Bureau said that the non-oil sector declined by 0.38 per cent in real terms in the second quarter of 2016, while recording growth rate of 0.20 per cent.

It also said the country recorded employment of 106.69 million persons aged between 15 and 64 in the second quarter of 2016, a 0.65 per cent higher than 106.00 million recorded in the first quarter.

The Statistician-General of the Federation, Dr. Yemi Kale, said economically active population or working age population such as persons between 15 and 64 years increased from 106.00 million in first quarter to 106.69 million in second quarter of 2016.

Dr. Kale said: “This represents a 0.65 per cent increase over the previous quarter and a 3.02 per cent increase when compared to second quarter of 2014.

“In the second quarter of 2016, the labour force population (those within the working age population willing, able and actively looking for work) increased to 79.9 million from 78.5 million in the first quarter of 2016.

“This represents an increase of 1.78 per cent in the labour force during the quarter.’’

According to him, this means that 1.39 million persons from the economically active population entered the labour force.

Those in the economically active population are the individuals that were able, willing and actively looking for jobs to do.

His words: “This magnitude of this increase between first and second quarters of 2016 is smaller when compared to four quarter of 2015 and first quarter of 2016, which was an increase of 1.59million in the labour force population.

“Within the reference period, the total number of person in full time employment (did any form of work for at least 40 hours) decreased by 351,350 or 0.65 per cent when compared to the previous quarter and also decreased by 749,414 or 1.38 per cent compared to second quarter of 2015.’’

The statistician-general said that with 106.69 million and 79.9million, it meant 26.8 million persons within the economically active or working age population decided not to work for one reason or the other in the second quarter of this year.

“Hence, they were not part of the labour force and cannot be considered unemployed,’’ Kale said.

The NBS described the unemployed as those who were actively looking for work but could not find any for at least 20 hours during the reference week.

“Accordingly, you are unemployed if you did absolutely nothing at all or did something but far less than 20 hours during the reference week”, the report said.

The Bureau put the value of share capital imported by different sectors of the economy at 202.70 million dollars in the second quarter of 2016.

The figure represents a 16.77 per cent decline against 84.17 per cent recorded in 2015.

Kale stated: “Capital is either imported in the form of shares, or directly imported by different sectors of the economy.

“In the second quarter of 2016 the value of share capital imported was estimated to be $202.70 million, which as for capital importation as a whole sets the record for the lowest value for the second consecutive quarter.

“The figure represents a decline of 16.77 per cent relative to the previous quarter, and a decline of 84.17 per cent relative to the same quarter of 2015.’’

The Bureau’s chief noted that this was a smaller year-on-year decline than in the previous quarter, in which it was 87.41 per cent.

He said that the share capital accounted for 31.32 per cent of total capital imported, less than half its share in the second quarter of 2015 of 70.41 per cent and the lowest level in seven years.

His words: “Nevertheless, the share capital still accounts for a larger proportion of total imported capital than any individual sector.

“For the first time on record, the sector to import the largest amount of capital was servicing, which accounted for $130.98 million, or 20.24 per cent of the total.

“This follows a large increase when the Direct – Equity Portfolio – Equity Portfolio – Money Market Instruments Other – Loans value was $12.83 million in the second quarter of 2015.’’

The Bureau said the increase also recorded when the value was $55.05 million in the previous quarter.

“In all the previous quarters, the sector to import the most capital had been either banking, financing, production or telecommunications. For the second consecutive quarter, production was the sector to import the second largest amount of capital,’’ Kale said.

This sector, he said, imported 92.62 million dollars, equivalent to 14.31 per cent of the total, following a quarterly increase of 14.86 million dollars, or 19.10 per cent.

The NBS chief also said that the capital imported by the production sector increased by 80.92 per cent year-on-year, stating that there were six sectors that recorded no capital importation in the second quarter of 2016.

“These sectors are fishing, marketing, hotels, tanning, transport and weaving,’’ he said.

Kale said that half of the 20 sectors recorded a decline in the amount of capital imported relative to the previous quarter.

“The largest fall was in the electrical sector, which recorded 61.32 million dollars less. By contrast, telecommunications recorded the largest increase, and imported 64.10 million dollars more than in the previous quarter”, the statistician-general said.