The Lagos Chamber of Commerce and Industry (LCCI) has forecasted that the Nigerian economy is expected to have improved economic performances in the 3rd and 4th quarters of the year.
This was disclosed by Mrs Toki Mabogunje, LCCI President, at the LCCI’s Quarterly State of the Economy Conference on Tuesday in Lagos.
They said the improved performance would be largely on account of low base effect arising from Q3 and Q4-2020’s performance, driven by massive policy support and continued vaccination deployment in advanced economies.
What the LCCI said
“Juxtaposing the current growth level with population growth estimated at 2.7 per cent by the World Bank implies the economy, as of Q2 2021, was almost at the same growth level with the population growth on average.
“We only hope to see this strong growth level continue into the rest of the year.
“Nigeria’s actual output performance is still below its potential output level as recorded in the pre-COVID-19 period.
“Achieving key development outcomes such as employment creation and poverty reduction will always remain elusive in the light of fragile recovery.
“This reinforces the need for policymakers to pursue critical reforms to bolster confidence in the economy, accelerate post-pandemic recovery and alleviate poverty,” she said.
The LCCI President said that the International Monetary Fund (IMF) and World Bank projected growth figures of 2.5 per cent and 1.8 per cent respectively, on the assumption of stronger commodity prices, transition to market-reflective exchange rate system, vaccination progress, and the successful implementation of reforms in the oil sector.
She noted that while these factors appear somewhat realistic in their view, they believe rising insecurity, lingering forex illiquidity, low vaccination rate and lack of will to follow through with critical reforms constitute major downside risks to the country’s growth outlook.
She also stated that manufacturing sustained the positive growth trajectory after contractions in 2020, partly supported by developmental finance interventions of the Central Bank of Nigeria amid numerous headwinds that confronted industry players, citing that areas of manufacturing with high levels of backward integration had lesser degrees of shocks from foreign exchange crises in the economy.
“During the quarter, the sector was driven mainly by growth in trade 22.49 per cent, telecommunication 5.90 per cent, road transport 92.38 per cent, electricity 78.16 per cent, crop production 1.38 per cent and food, beverage & tobacco 4.87 per cent.
“These records reflect the easing of supply chain disruptions and increasing business and economic activities across the country relative to the same period a year earlier,” she said.
She advised that the FG needed to support the business climate for Micro, Small and Medium Enterprises (MSME) as well as large corporates at the national, subnational, and local government levels, as it was critical in facilitating private sector involvement in the economic recovery process, citing that beyond the issues around the collection and distribution of the Value Added Tax (VAT), the government must become more concerned about the needs of the goose that laid the eggs, the private sector.
“The private sector accounts for over 80 per cent of total economic activities in Nigeria and it is therefore imperative to ensure an enabling operating environment for investors in the economy. The chamber is also urgently calling for a holistic and dynamic review of the security architecture to address the seemingly worsening security situation in the country,” she said.
What you should know
Nairametrics reported that Nigeria’s Gross Domestic Product (GDP) grew by 5.01% (year-on-year) in real terms in the second quarter of 2021, marking three consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.
The non-oil sector grew by 6.74% in real terms while the oil sector declined by 12.65% year-on-year.
The contribution of the non-oil sector grew from 90.75% recorded in the previous quarter to 92.58% in Q2 2021 while the oil sector contribution declined from 9.25% to 7.42%.