NAN-HE-22
Economy
By Donald Ugwu
Abuja, Nov. 21, 2016 (NAN) The Economic Management Team of the Presidency said on Monday that it was too early for the Federal Government’s policy interventions to begin to fully impact on economic activities.
The Special Adviser to the President on Economic Matters, Dr Adeyemi Dipeolu, said this while reacting to the just released National Bureau of Statistics (NBS) report on the economy.
A release issued by the Vice Presidential Spokesman, Mr Laolu Akande, in Abuja, said the Economic Management Team acknowledged the veracity of the report.
“The third quarter results just released by the National Bureau of Statistics show that the Nigerian economy is still in recession.
“Growth in Gross Domestic Product fell by -2.24 per cent in the third quarter as compared to the decline of -2.07 per cent experienced in the second quarter,’’ the report noted.
Dipeolu, however, said the slight deterioration in national economic performance was due largely to the continued poor performance of the oil and gas sector.
According to him, the sector performed at -22.01 per cent in the third quarter as compared to -17.48 per cent in the second quarter of 2016.
“The immediate cause of this, as is now generally recognised, is the steep decline in oil and gas production in the third quarter of 2016 due to acts of vandalism and sabotage of oil export facilities.
“Remote causes include the continued outsized influence of the oil and gas sector on the rest of the economy as typified by its contribution to government revenue and foreign exchange earnings,’’ he said.
He said the sector had continued to be important drivers of economic activity.
He added that due to time lags, it is still too early for policy interventions of the Federal Government to begin to impact fully on economic activity.
The economic adviser noted, however, that some ‘green shoots’ of economic recovery are beginning to emerge.
“To start with, on-going consultations to bring lasting peace to the Niger Delta have enabled an increase in oil and gas production which if sustained at current prices will bring a measure of relief to the economy.
“Other key sectors of the economy showed encouraging signs of improvement.
“The growth in the non-oil economy although still weak at 0.03 per cent showed a return to positive territory after two consecutive quarters of negative growth.
“This was partly due to the continued good performance of agriculture and the solid minerals, two sectors prioritised by the Federal Government.
“Agriculture grew by 4.54 per cent in the quarter under consideration of which growth in crop production, at nearly five per cent, was at its highest since the first quarter of 2014.
“Growth in the solid mineral sector averaged about seven per cent,’’ he said.
He noted that the financial sector rebound quite strongly in the period under review growing by 2.85 per cent from a negative growth of -13.24 per cent in the second quarter.
He added that the recently approved first tranche of $600m to be borrowed from the African Development Bank would also provide some relief in budgetary terms and supplement capital inflows.
Accordingly, Dipeolu observed that there was a slight uptick of capital inflows into the economy in the third quarter of 2016 with the overall capital inflows increased by 74.84 per cent over the second quarter.
He said the performance of the manufacturing sector continued to be of concern given its key role in value addition and job creation in the economy.
He said it was expected that the sector would soon experience a sustained improvement in its contribution to the national economy.
He said the growth would happen following greater local sourcing of raw materials, expected improvements in infrastructure, especially power and reductions in the cost of doing business.
Dipeolu said while inflation remained high at 18.3 per cent on a year-on-year basis it had begun to level out on a month-on-month basis and should enable the deployment of more policy tools to support growth and employment.
“Indeed, growth of headline inflation slowed down appreciably from 13.8 per cent in May to as low as 1.7 per cent in September.
“The year to date growth is about -1.58 per cent and is set to improve given some of the points mentioned earlier especially regarding agriculture, oil and gas, and power supply.’’
He noted that there was reduction in the rate of contraction of household and government consumption expenditure.
According to Dipeolu, household consumption expenditure fell -3.25 per cent in the third quarter of 2016 as compared to -6 per cent recorded in the second quarter.
The economic adviser added that the ratio of investment to GDP also showed a notable improvement rising by 7.6 per cent in the third quarter of 2016.
“The Strategic Implementation Plan for the implementation of the 2016 Budget of Change prioritised capital expenditures for power, roads and rail as well as social investments.
“In addition to creating jobs and promoting social inclusion, these expenditures will also provide a stimulus by putting money in the hands of people.
“The usual economic activity that takes place in the Yuletide season will also likely have a positive impact on the wholesale and retail trade sector,’’ he added.
Dipeolu said that an Economic Recovery and Growth Plan (ERGP), to be adopted before the end of the year, would lend further momentum to on-going efforts to revitalise and reposition the economy. (NAN)
DCU/YEE
Edited by Emmanuel Yashim
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