ABUJA – Nigeria’s economy grew 1.87% in the first three months of 2020 from a year earlier, the statistics office said on Monday, shrinking from the previous quarter as oil prices and international trade fell due to the coronavirus pandemic.
It is the slowest quarterly growth rate in one-and-a-half years, and comes as Nigeria has still not recovered from a 2016 recession that sent more than 13 million people into unemployment.
The slowdown reflects “the earliest effects of the disruption” from the global outbreak, said Nigeria’s National Bureau of Statistics, and comes as the government expects Africa’s largest economy to contract this year as much as 8.9% in a worst case scenario.
Nigeria’s crude production was 2.07 million barrels a day, the statistics office said, the country’s highest level in more than four years.
But a global oil price crash due to reduced demand from the pandemic threatens to offset those gains, with annual growth in the oil sector contracting 1.3% from the previous quarter to 5.06%.
The non-oil sector was also hit: growing by just 1.55%, which was down 0.72% from the last three months of 2019, the statistics office said.
Oil contributes less than 10% to GDP, but it accounts for half of the government’s income and about 90% of Nigeria’s foreign-exchange earnings. Africa’s biggest crude producer has more than halved the benchmark price in its budget to $25 per barrel for 2020 while keeping spending targets mostly intact, a step which would mean more borrowing to finance the fiscal plans.
Nigeria’s oil revenues declined by 125.5 billion naira ($326 million) in the first quarter, an indication of the headwinds the economy is facing from the coronavirus pandemic and low crude prices, Finance Minister Zainab Ahmed said last week. Without stimulus, the economy could contract by 8.9%, she said.
The World Bank expects the coming recession to be “much more pronounced” than in 2016 and potentially Nigeria’s worst financial crisis in four decades.