The Nigerian economy shrank for four consecutive quarters in 2016 and contracted for the whole year, the National Bureau of Statistics (NBS) has revealed.
According to the NBS report released on Tuesday, Nigeria recorded a contraction of -1.51 percent in 2016, the country’s worst economic performance since 1987.
“In the fourth quarter of 2016, the nation’s Gross Domestic Product (GDP) contracted by -1.30% (year-on-year) in real terms, from N18,533.75 billion in Q4 2015 to N18,292.95 billion in Q4 2016,” NBS said.
“This decline was less severe than the decline recorded in the previous quarter, of -2.24%, but was nevertheless lower than the growth rate recorded in the final quarter of 2015, of 2.11%.
“Quarter on quarter, real GDP increased by 4.09%, which partly reflects seasonal factors as well as a rise in the general price level. For the full year 2016, therefore, GDP contracted by -1.51%, indicating real GDP of N67,984.20 billion for the year.”
The economic nosedive is largely attributed to a decline in the prices and output of crude oil, Nigeria’s largest export and driver of economic growth. According to the NBS report, the oil sector of the economy declined by -12.38 percent.
The fall in oil prices and output, according to Bloomberg, nearly halved government revenue and simultaneously reduced the availability of foreign currency to import refined fuel.
The non-oil sector, while increasing its share of the GDP to 92.85 percent, also declined in 2016.
“The non-oil sector declined by -0.33% in real terms in the fourth quarter of 2016. This was 0.36% points lower than growth of 0.03% recorded in Q3 2016, and 3.46% points lower than the 3.14% growth recorded in Q4 2015,” the report stated.
Inflation of the naira also played a large role in the recession, as did the Central Bank of Nigeria’s (CBN) decision to increase its key lending rate to 14 percent.
Despite Nigeria’s poor economic performance in 2016, the Nigerian government is confident that the economy will rebound in 2017, citing rising fuel prices and increased stability in the volatile, oil-rich Niger Delta region. Indeed, the International Monetary Fund (IMF) has predicted that Nigeria’s economy will grow by 0.8 percent in 2017.