By Modupe Gbadeyanka
The real impact of the coronavirus (COVID-19) pandemic would be felt in the Nigerian economy in the second quarter of 2020.
This was the submission of the Nigeria Employers Consultative Association (NECA) in a statement it issued on Monday in reaction to the Gross Domestic Product (GDP) figures released yesterday by the National Bureau of Statistics (NBS).
The bureau had said in the first quarter of this year, the growth rate of the nation’s economy slowed by 1.87 percent, with the non-oil sector contributing over 90 percent to the GDP.
The crashing of the price of crude oil at the global market has put a strain on the revenue of government to fund its 2020 budget and the benchmark has now been reduced to $25 per barrel.
Also, the global health crisis forced a lockdown in Lagos, Abuja and Ogun State for five weeks and at the moment, the economy is still operating at about 25 percent of its full capacity.
In the statement issued yesterday, the body of employers in the country said the effects of these external shocks would be felt on the economy in this present quarter.
According to the Director-General of NECA, Mr Timothy Olawale, Nigeria’s economy faced grave threat, like every other economy in the world, most especially oil-dependent economies.
He noted that this was an indication of the headwinds the economy was facing from the coronavirus pandemic and low crude price occasioning a fall in government revenue, stating that a contraction is anticipated in the second quarter.
“The lockdown of the Nigerian economy commenced in April due to the pandemic. Therefore, the real impact of COVID-19 on the economy would be felt in the Q2 GDP result,” he declared.
He, therefore, called on the fiscal and monetary authorities to develop a more aggressive and decisive policies to sustain economic recovery in the wake of further decrease in oil price.
“We anticipate contraction in the second quarter, as the economy witnessed a six-week lockdown on the commercial nerves of the country.
“Similar trend was witnessed in the global economy, except China, whose consumption of fuel due to opening of industrial hubs and transportation could portend mild positive growth pattern due to demand for crude oil.
“There is the need for the fiscal and monetary authorities to develop a more aggressive and decisive policies to sustain an economic recovery in the wake of further low oil prices,” Mr Olawale said.
He called for stimulus packages for the worst-hit sectors of the economy in order to avoid contraction.
“We believe that more coordinated stimulus packages targeted at the worst-hit sectors of the economy would sustain the economy from experiencing contraction of 8.9 percent as predicted,” he stated.
