Nigeria's real GDP growth rate declined to -0.36% in the first quarter of 2016, pushing the economy toward a recession. The unemployment rate also increased to 12.1%. This article discusses the factors contributing to the decline and the potential impact on the country's economy.
The National Bureau of Statistics (NBS) has released data showing that Nigeria's real Gross Domestic Product (GDP) growth rate declined to -0.36% in the first quarter of 2016, compared to 2.11% in the previous quarter. This negative growth rate confirms the earlier statement by the Minister of Information, Alhaji Lai Mohammed, that the federal government was facing financial difficulties. The decision to increase the pump price of Premium Motor Spirit (PMS) from N86.50 to N145 per litre was made to free up funds for the government's financial obligations.
The decline in GDP growth rate suggests that Nigeria is on a recessionary path, as it would require one more negative growth rate in the next quarter to officially enter into a recession. The last time the country experienced a contraction was in June 2004, making this the lowest growth rate in 12 years.
Furthermore, the unemployment rate in Nigeria has risen to 12.1% in the first quarter of 2016, compared to 10.4% in the previous quarter. The number of unemployed individuals in the labor force increased by about 1.449 million, contributing to the rise in the unemployment rate. The country failed to create the 1.5 million jobs needed to maintain the previous quarter's unemployment rate.
The decline in GDP growth rate can be attributed partly to the decrease in daily oil production, which fell to 2.11 million barrels per day (mbpd) in Q1 2016. This represents a 0.5mbpd decrease from the previous quarter and a 0.07mbpd decrease compared to the corresponding quarter in 2015. However, the oil sector still contributed 10.29% to the total GDP, indicating its significance in the country's economy.
The non-oil sector also experienced a slowdown, with a decline of 0.18% in real terms in the first quarter of 2016. However, it remained the major contributor to the GDP, accounting for 89.71%. The manufacturing sector, an important component of the non-oil sector, saw a slowdown as well. The nominal GDP growth of the manufacturing sector in Q1 decreased by 2.98% compared to the previous year and 9.91% compared to the previous quarter.
The decline in GDP growth rate, coupled with the rising unemployment rate, raises concerns about the state of Nigeria's economy. The government will need to take proactive measures to address the challenges faced by the country. Stimulating economic growth, creating more jobs, and diversifying the economy away from dependence on oil should be key priorities.
Source of content: OOO News 2023-08-10 News
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