By Dipo Olowookere
The desperate need for the Nigerian government to come up with policy and structural reforms to avert another economic recession in Nigeria has been emphasised by analysts at United Capital Research.
In their daily market report on Tuesday, the financial and investment services power house said Nigeria and South Africa, the two biggest economies in Africa, must return to a sustainable long medium term growth.
On Tuesday, data from South Africa’s statistical agency, Statistics South Africa (Stats SA), showed that in addition to a steeper 2.6 percent q/q Gross Domestic Product (GDP) contraction recorded in Q1-18, the country’s GDP fell further by 0.7 percent q/q in Q2-18 – technically pushing the nation into recession.
United Capital Research, in its report titled ‘African Giants: Why are the mighty falling?’ it was disclosed that the South African recession came in a period where Nigeria, another African giant, recorded a further slowdown in its Q2-18 GDP growth to 1.5 percent after crawling out of recession in Q2-17, noting that this trend underscores the fragility of its economic recovery, prompting the above question.
While the Nigerian economic slump of 2016 and the recent Q2-18 slowdown are resulting effects of downturns in the Oil sector, the recent South African economic collapse is traced to massive output declines in the Agriculture, Trade and Manufacturing sectors. Also, strengthening dollar, escalating trade tensions and routs across emerging markets, added to the worries of African giants during the period – especially South Africa.
“However, both countries face serious structural obstacles which include high unemployment rates and policy stagnation. Thus, we believe that for these African giants to return to a sustainable long medium term growth, there is a desperate need for policy and structural reforms,” the report said.
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