The outbreak of the coronavirus pandemic in Nigeria may result in a decline of N4.95tn in the nation’s nominal Gross Domestic Product in the present fiscal year, investigation has revealed. Nominal GDP measures the value of all finished goods and services produced by a country at their current market prices. The N4.95tn decline in nominal GDP is about 48.19 per cent of the Federal Government’s revised N10.27tn budget.
The pandemic which has so far affected about 32 states and the Federal Capital Territory had led to unprecedented slump in global crude oil prices. So far, total lockdown has been announced by the President, Major General Muhammadu Buhari (retd.) in three states – Lagos, Ogun, Kano – and the FCT. Other state governments have also announced curfew in their states to complement the efforts of the Federal Government.
These developments have paralysed economic activities and led to loss of incomes by businesses and households. Before the outbreak of the pandemic, there had been various projections about the potential of the Nigerian economy in the 2020 fiscal period. The International Monetary Fund had, for instance, projected that the economy would grow by 2.5 per cent this year.
In February, after concluding an Article IV consultation in Nigeria, the global financial body cut the growth projection to two per cent. It explained that Nigeria needed a major policy overhaul to reduce vulnerabilities including widening account and budget deficits that had put the economy in jeopardy. Few weeks after revising the growth prospects for the nation’s economy, the country recorded its first coronavirus index case.
But with the number of cases rising, and the drop in crude oil price from about $46.64 per barrel in February to less about $19 per barrel as of Monday, the IMF again said the Nigerian economy could shrink by 3.4 per cent this year. Based on the 3.4 per cent revised growth projection of the IMF, the nominal GDP which stood at N145.64tn in 2019 is expected to drop by N4.95tn to about N140.69tn at the end of this year.
Nominal GDP in the 2019 fiscal period had assumed an upward trend rising from N32.08tn in the first quarter to N35.3tn, N37.81tn and N39.57tn in the second, third and fourth quarters respectively. Experts have said the overall medium-term outlook for the global economy remains uncertain with increased deterioration in financial market conditions and weak global output growth. A professor of economics at the Olabisi Onabanjo University Ago-Iwoye, Ogun, Sheriffdeen Tella, said it would take some time for the economy to recover.
He said, “There is no production in the last four weeks and when there is no production, a lot of industries will be shut down and it will cause a drawback. “There is also uncertainty as to when production will start in many parts of the world. So, we are already in recession as it were.” Also, a professor of Capital Market Studies, Uche Uwaleke, said the disclosure by the IMF on global economic recession would affect Nigeria’s economy negatively. Uwaleke in a telephone interview with our correspondent said that Nigeria’s revenue from oil would be seriously affected.