As the National Bureau of Statistics plans to release the Gross Domestic Product growth rate for the second quarter on Tuesday, finance and economic experts have predicted that the economy is on its way out of recession.
The NBS, which was initially meant to release the second quarter GDP on Monday, had explained that the public holidays declared by the Federal Government to mark the Sallah celebration necessitated the extension by 24 hours.
The bureau said, “Please note that due to the public holidays on Friday 1st of September and Monday 4th of September, the Q2 2017 GDP report will be released on Tuesday September 5, 2017 not Monday 4, 2017.
But speaking on their expectations for the GDP report, economic experts said that the economy had shown a lot of signs to prove that the country is on its way out of recession.
Those that spoke to our correspondent are the President, Abuja Chamber of Commerce and Industry, Mr. Tony Ejinkeonye; the Head of Banking and Finance Department, Nasarawa State University, Uche Uwaleke; and a former Managing Director, Unity Bank Plc, Mr. Rislanudeen Mohammed.
Ejinkeonye said that based on the performance of some key economic variables, the Nigerian economy was already showing huge signs of recovery.
For instance, he said the increase in the Purchaser Manager’s Index, which had risen for four consecutive months, showed that manufacturing activities were bouncing back.
This, he noted, was as a result of improved access to foreign exchange and stability of the naira at all segments of the foreign exchange market.
He added that businesses that shut down operations at the peak of the economic problems last year had resumed operation again, with big conglomerates now investing in backward integration to avert input shock and to manage their risks.
He said, “The revival of production across sectors has caused inflation to adjust downward from 19 per cent to 16 per cent.
“The International Monetary Fund projected 17.5 per cent inflation for Nigeria and now, we have surpassed that benchmark and it is expected that inflation would even go down further before the end of the year.
“In response to the positive swing, foreign capital inflow increased significantly and in a balanced style in the second quarter of the year. Both Foreign Direct Investment and Foreign Portfolio Investment jumped 30 per cent and 95 per debt, respectively.
“Based on the renewed appetite for Nigeria equities and debts by foreign investors, Nigeria Stock Exchange equally gained over 40 per cent year-to-date.
“The combine effect of increased production, price stability and foreign capital inflow we expect will help in reducing unemployment; this is compelling evidence of economic recovery and growth.”
He, however, urged the government to consolidate on these gains by effectively implementing the 2017 budget to take the economy into full growth before the end of the year.
In his comments, Uwaleke said the economy had witnessed a number of positive developments since the end of the first quarter of 2017 during which a negative contraction of – 0.52 per cent was recorded.
For instance, he said in April, the Central Bank of Nigeria had introduced the investors-exporters foreign exchange window which largely improved the liquidity in the foreign exchange market and stabilised exchange rate.
He said crude oil price was about $50 per barrel on the average in the second quarter, surpassing the budget reference price of $44.5 per barrel.
Also, Uwalake, an associate professor of finance, noted that the second quarter witnessed a lot more clarity in government policies as the Economic Recovery and Growth Plan was unfolded.
Not surprisingly, he said capital importation in the second quarter outpaced the level recorded in the first quarter by over 95 per cent.
He said unlike in the first quarter, the stock market posted positive returns between April and June.
Similarly, he explained that manufacturing activity expanded during the period as the Purchasing Managers Index stayed above 50 points for the three months.
“So, I expect an improvement in real GDP over the figure recorded in the first quarter. However, positive growth may not really manifest up until the third quarter of 2017 following the implementation of the 2017 budget.
“Even with positive GDP figure, the impact on job creation and poverty alleviation may not be significantly felt until the economy grows above the population growth rate of 3.5 per cent,” he added.
Mohammed in his comments said with reserves showing significant improvement and with an increase in agricultural output, the economy might experience technical exit from recession in the second quarter.
He said, “With improved forex liquidity arising improved oil price, improved output as well as export earnings, foreign reserve has gone up. There is an indication that the pace of negative growth has subsided. We may soon see technical exit from recession by getting out of negative GDP growth rate.
“That can however only be sustained if critical sectors like agriculture and manufacturing continue to take upward growth trajectory and export income diversification strategy is actualised.”
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