Full implementation of 2016 budget key to growth – Economists

Economists within and outside the country are optimistic that the Nigerian economy is on its way out of recession, if the federal government ensures a full implementation of the ongoing 2016 budget.

This is just as the fourth quarter (Q4) 2016 Gross Domestic Product (GDP) showed contraction of -1.30 percent in real terms, from N18.5 trillion in Q4 2015 to N18.2 trillion in Q4 2016, as latest figures from the Nigerian Bureau of Statistics (NBS) have revealed.

Commenting on this development, Dr. Uche Uwaleke, HOD, Banking &Finance, Nasarawa State University, noted that before 2017 runs-out, Nigeria is going to record positive growth in GDP.

According to him, when the first quarter 2017 report comes out, my expectation is that we are going to record an improvement in GDP growth.

“The signs are there, because if you look at the nation’s purchasing Manager’s Index (PMI), it improved slightly in December and that tells you that production is gradually picking up.

“I believed that if government continues to implement the 2016 budget, which will still run till May, the chances are that, the recession that we are in will be over. But I also want say that is not just about the number. So that, we don’t preoccupy ourselves with the number, hence if at the end of first Quarter (Q1) now they tell us that GDP is now positive that doesn’t really mean that it is all well for Nigeria”, he stated.

He explained that it shows that things are improving but government must be conscious of the fact that it doesn’t tell the full story. Government should be after the poverty level because inflation is the key misery index.

“Aside from having the GDP figure coming positive, it is also very important that the price of commodities is brought down, because it is only when you brought down inflation rate, with direct effects on prices of goods in the market that is when you can begin to have positive impacts on the life of ordinary Nigerians”, he explained further.

He stressed that it is not just the absolute number of GDP but to look at the totality of its effects on the common man.”

Meanwhile, the NBS report for the full year 2016, indicated that the GDP contracted by -1.51 percent, representing of N67,984.20 billion for the year. This contraction reflects a difficult year for Nigeria, which included weaker inflation-induced consumption demand, an increase in pipeline vandalism, significantly reduced foreign reserves and a concomitantly weaker currency, and problems in the energy sector such as fuel shortages and lower electricity generation.”

Nominal GDP was N29, 292,998.54 at basic prices in the fourth quarter of 2016, which represents year on year nominal growth of 12.97 percent. In contrast to real growth, this is 5.84 percentage points higher than the rate recorded in the same quarter of 2015, implying that the GDP deflator increased faster than the earlier period. For full year 2016, aggregate nominal GDP stood at N101, 598,482.13 compared to N94,144,960.45.

According to the report, both oil and non-oil sectors recorded a decline, but the non-oil sector increased its share of the economy to 92.85 percent.

“In the fourth quarter of 2016 this sector declined by -12.38percent in real term (year-on-year). This was an improvement relative to the previous quarter, when the sector declined by -22.01percent, but nevertheless was a more severe decline than in the fourth quarter of 2015, when a contraction of -8.23percent was recorded.

“The non-oil sector declined by -0.33percent in real terms in the fourth quarter of 2016. This was 0.36percent points lower than growth of 0.03percent recorded in Q3 2016, and 3.46percent points lower than the 3.14percent growth recoded in Q4 2015.

“Given that the growth rate was stronger than in the oil sector the non-oil sector increased its share of GDP to 92.85percentpercent from 91.94percent in the fourth quarter of 2015,” NBS reports.