Nigeria’s Gross Domestic Product (GDP) decreased by -6.10% year-on-year) in real terms in the second quarter of 2020, ending the 3-year trend of low but positive real growth rates recorded since the 2016/17 recession.
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.
The domestic efforts ranged from initial restrictions of human and vehicular movement implemented in only a few states to a nationwide curfew, bans on domestic and international travel, closure of schools and markets etc., affecting both local and international trade.
The efforts, led by both the Federal and State governments, evolved over the course of the quarter and persisted throughout.
When compared with Q2 2019, which recorded a growth of 2.12%, the Q2 2020 growth rate indicates a drop of -8.22% points, and a fall of -7.97% points when compared to the first quarter of 2020 (1.87%).
Consequently, for the first half of 2020, real GDP declined by -2.18% year on year, compared with 2.11% recorded in the first half of 2019. Quarter on quarter, real GDP decreased by -5.04%. Furthermore, only 13 activities recorded positive real growth compared to 30 in the preceding quarter.
In the quarter under review, aggregate GDP stood at N34,023,197.60 million in nominal terms, or 2.8% lower than the second quarter of 2019 which recorded an aggregate of N35,001,877.95 million.
Overall, the nominal growth rate was -16.81% points lower than recorded in the second quarter of 2019, and -14.81% points lower than recorded in the first quarter of 2020. For better clarity, the Nigerian economy has been classified broadly into the oil and non-oil sectors.
The Oil Sector
In the second quarter of 2020, average daily oil production of 1.81 million barrels per day (mbpd) was recorded. This was -0.21mbpd lower than the daily average production of 2.02mbpd recorded in the same quarter of 2019, and -0.26mbpd lower than the first quarter 2020 production volume of 2.07mbpd by (Figure2).
The real growth of the oil sector was -6.63% (year-on-year) in Q2 2020 indicating a decrease of -13.80% points relative to the rate recorded in the corresponding quarter of 2019. Growth decreased by -11.69% points when compared to Q1 2020 which recorded 5.06%.
Quarter-on-Quarter, the oil sector recorded a growth rate of -10.82% in Q2 2020. The Oil sector contributed 8.93% to total real GDP in Q2 2020, down from figures recorded in the corresponding period of 2019 and the preceding quarter, where it contributed 8.98% and 9.50% respectively.
The Non-Oil Sector
The non-oil sector declined by -6.05% in real terms during the reference quarter (Q2 2020). It was the first decline in real non-oil GDP growth rate since Q3 2017. The recorded growth rate was -7.70% points lower compared to the rate recorded during the same quarter of 2019, and -7.60% points compared to the first quarter of 2020.
Nevertheless, non-oil sector output was driven by Financial and Insurance (Financial Institutions), Information and Communication (Telecommunications), Agriculture (Crop Production), and Public Administration, moderating the economy-wide decline.
On the other hand, sectors which experienced the highest negative growth included Transport and Storage, Accommodation and Food Services, Construction, Education, Real estate and Trade among others.
In real terms, the Non-Oil sector accounted for 91.07% of aggregate GDP in the second quarter of 2020, slightly higher than the share recorded in the second quarter of 2019 (91.02%) as well as the first quarter of 2020 (90.50%).
The third-quarter results have also been projected to be negative, which will officially land the economy in a recession.
A recession is only declared after two consecutive quarterly contractions.
In May, Finance Minister, Zainab Ahmed, predicted that the country was heading towards a recession.
“On the economy, COVID-19 has resulted in the collapse in oil prices,” she said after a National Economic Summit meeting. “This will impact negatively, and the impact has already started showing on the federation’s revenues and on the foreign exchange earnings.”