Controversies have continued to follow the latest pronouncements by the Chief Executive Officer, Nigerian Bureau of Statistics (NBS), Dr. Yemi Kale, that the Nigerian economy will be out of recession come 2018 as economists, industry analysts, and financial experts expressed divergent views.
The Daily Times recalls that in the first quarter of 2017, the nation’s Gross Domestic Product (GDP) contracted by –0.52 per cent (year-on-year) in real terms, representing the fifth consecutive quarter of contraction since Q1 2016.
This represents 0.15 per cent higher than the rate recorded in the corresponding quarter of 2016 (revised to –0.67 per cent from –0.36%) and higher by 1.21% points from rate recorded in the preceding quarter, (revised to –1.73% from –1.30%). Quarter on quarter, real GDP growth was –12.92 per cent
During the quarter, aggregate GDP stood at N26, 028,356.03 million in nominal terms, compared to N22, 235,315.29 million in Q1 2016, resulting in a Nominal GDP growth of 17.06 per cent. This growth was higher relative to growth recorded in Q1 2016 (11.39%).
But in spite this, the NBS boss in an interview with the Economic Confidential magazine in Abuja over the weekend, said, “If all prices do not collapse including Niger Delta crisis, by 2018 we would have recovered”.
Speaking on the economic situation currently bedeviling the nation, Dr. Kale said “It was an extremely difficult period and we all felt it. I will say that most of the indicators suggest that we are coming out of it.”
“We have not come out of it yet. As if the worst has already happened and it’s a low process of recovery. Now there is what we call technical recovery as different from the recovery Nigerians would prefer”, he said.
But The Daily Times spoke to the CEO, Financial Derivatives Company Ltd, Bismarck Rewane, who said he never believed the NBS boss said that and that he hasn’t seen the story, hence, he would not be able to comment on the development.
According to him, “He is quoted out of context and I don’t belief in the story, so, I’m not going to comment on it because it is not true.”
When pressed for further comment, he said: “First and foremost, I have not seen the report and secondly, I don’t believe that story and I’m not going to comment on it”, he insisted.
However, Professor of Banking and Finance and Dean of Faculty, University of Uyo, Prof. Leo U. Ukpong, in an exclusive telephone chat on Sunday with our correspondent, said that usually, there is always an official spokesperson and the person who collects the statistics probably is the person to tell us. Because they are
collecting the statistics every blessed day and they know what they are seeing.
“So, I would believe the bureau of statistics words more, because the Finance Minister and the Central Bank of Nigeria (CBN) Governor have political undertone, even though they should not, they try to paint the government’s logo. When the Finance Minister said we are coming out of recession, I did not belief her”, he explained.
“But in my opinion, I don’t even think it will be 2018. I thought it would break even somewhere in the third quarter (Q3) of 2017. But it is going to depend on how they implement and execute the recently approved budget; if they can approve spending, especially on short-term capital projects quick to inject money into the system, I think that will help the economy grow up faster.
“But if they go to the conferences and start playing politics and the money is not released even though the budget is approved, it could go into 2018.
“So, the ability to inject money quick into the system and stimulate the economy, if they do that, we may see an end to this recession somewhere at the end of this year, but if not, it might be somewhere around first quarter (Q1) 2018,” Prof. Ukpong added.
Commenting on discordant voices from government agencies, Prof. Ukpong, noted that “it is not a good development but very bad. In order words, it is inconsistency and in a situation like that, the investors are confused and I think that is not good in terms of confidence”.
“Stock market may probably react negatively with these different positions and that is the same problem we’ve been having with the Central Bank of Nigeria and the Federal Government when the president is saying one thing and the CBN Governor is doing something else. People lose confidence and investors will start withdrawing their money or not investing in the economy. So, it is very bad, they need to speak in one voice,” he said.
Speaking also, Dr. Uche Joe Uwaleke, an Associate Professor, Nasarawa State University, said that the major assumption of those who think the economy will get out of recession before the end of this year by Q3 2017 is the fact that oil price will remain at least well above the budget reference price.
He said: “As long as oil price remains above $50 dollar per barrel for example and output is up to 2 million barrels per day, we see a possibility of the economy exiting recession since the economy still depends on oil.
“If we have improved oil revenue, I don’t see why the economy shouldn’t be out of recession. If Yemi Kale thinks that it will wait till 2018 before recession ends, that is a pessimistic side and that is because may be, he thinks the economy still needs more diversification to be done.
“But as I said, if we have improved performance in oil and we keep accretion to reserves and the CBN is in the position to intervene in the foreign exchange market and improved liquidity in the forex market as well, you will find out that it will go a long way in building investors’ confidence and economic activities in the country.