hehehehe....Nigeria’s economic slump sharpened in
the third quarter as rebels bombed oil pipelines in the restive south
and businesses struggled to access foreign exchange, official data
showed Monday.
The third quarterly contraction in a row
comes as the West African nation reels from a crash in global oil
prices, which have collapsed from over $100 a barrel in 2014 to
currently around half that.
A recession appeared inevitable when
militants renewed attacks on the country’s oil infrastructure early this
year, strangling production that accounts for around 70 percent of
government revenue and the bulk of Nigeria’s export earnings.
The relentless sabotage has put the
Nigerian government under pressure as economists increasingly question
whether President Muhammadu Buhari can pull the country out of
recession.
“The nation’s gross domestic product
(GDP) contracted by -2.24 percent year-on-year in real terms,” the
country’s National Bureau of Statistics said in a report.
This meant that third-quarter growth in
Africa’s most populous country was 0.18 percentage points weaker than
that recorded in the second quarter, and 5.1 points down from third
quarter growth in 2015.
“During the period under review, oil production averaged at 1.63 million barrels per day (bpd),” the statistics agency said.
That is a 22-percent drop from the same period in 2015, when Nigeria was producing 2.17 million bpd.
“Not only do the attacks have an instant
impact on output, and cause major damage to infrastructure, but
continued unrest will only further discourage international oil
companies from investing in oil projects,” Rhidoy Rashid, oil analyst at
Energy Aspects, said in a recent note.
“There seems to be no quick fix for
uniting a heavily divided region, so for now we expect further attacks
and subsequent volatility in Nigerian crude output.”
– Naira nightmare –
Manufacturing has also taken a big hit,
shrinking by 2.9 percent in the third quarter in the wake of a devalued
naira and currency controls that have curbed trade.
“This is partly due to the continued
fall in the exchange rate, which makes imported inputs more expensive,
thereby increasing business costs,” the statistics agency said.
“This is greatly a result of the
continued fall in (the) naira to dollar rate which translates to much
higher cost of business operations.”
Buhari had vowed not to “kill the naira”
by letting it fall in value, in opposition to depreciations by fellow
major oil exporters Angola and Russia.
His government tried to prop up the
naira for months, but that drained foreign currency reserves and it
eventually abandoned the currency peg in June.
But a dollar shortage still persists,
with black market rates hovering around 440 naira to the dollar this
month, compared to the official bank rate of approximately 320 naira to
the dollar.
The economic troubles look to last, with
peace talks between the Nigerian government and oil rebels falling
apart this month — the Niger Delta Avengers claimed they bombed three
pipelines last week — and foreign investors steering clear until they
see a more coherent economic policy.
– ‘Erratic policymaking’ –
“The risk is that positive momentum will
not necessarily emerge on auto-pilot,” Razia Khan, Africa economist at
Standard Chartered Bank, told AFP.
“Actual reforms will be required in order to drive it – and so far, these have been elusive.”
Economists cautioned that it was too early to say if the worst of the crisis had passed.
“With oil output likely to fall yet
again in the fourth quarter, it is too early to call the bottom of
Nigeria’s economic downturn,” John Ashbourne, Africa economist at
research firm Capital Economics, said in a note.
“The bigger picture is that today’s
figures suggest that the downtown continued into the third quarter
unabated,” Ashbourne added.
“Despite government efforts to boost
domestic production, the contraction of the manufacturing sector
worsened,” he said, adding “erratic policymaking continues to pose a key
risk to the economy”.
Nigeria overtook South Africa to become
the continent’s largest economy in 2014 after revising its GDP
statistics, yet it faces severe infrastructure challenges and suffers
from chronic power shortages, poor roads and high unemployment.
The International Monetary Fund has
forecast the West African nation’s gross domestic product will shrink by
1.7 percent this year, the first full-year contraction in more than two
decades, according to Bloomberg News.
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