1.87% growth: NECA calls for protection of economy from external shocks

Against the backdrop of the 1.87 per cent growth recorded by the economy in the first quarter of 2020, the Nigerian Employers’ Consultative Association (NECA) has called on the Federal Government to shield the economy from external shocks.

The body, in a statement issued on Monday and signed by its Director-General, Mr Olawale Timothy, while lauding the government for achieving the 1.87 per cent expansion of the economy in the first quarter, said the current structure of the economy put the nation at the mercies of global oil prices.

The statement reads further, “Nigeria’s economy, like other economies in the world, was faced with grave threat, most especially oil dependent-economies- an indication of the headwinds the economy is facing from the coronavirus pandemic and low crude prices, reflecting in fall in government revenue.

“Nevertheless, the country’s economic growth as released by National Bureau of Statistics (NBS) indicated an expansion by 1.87 per cent in the first quarter of the year, compared with growth of 2.55 per cent in the previous quarter.”

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It added that the slowdown in the GDP growth reflected the earliest effects of the disruptions on the non-oil economy, coupled with the conflicts between the U.S. and China which resulted into low demand in global oil.

NECA said: “In our analysis of the country’s economy, we observed a strong correlation between global oil prices (brent) and the country’s GDP between Q1 2014 and Q1 2020, indicating that the direction of growth is pretty much determined by the direction of oil prices.

“It can be adduced that a dollar increase in global oil prices corresponds with average 0.1 per cent rise in growth. A similar trend was witnessed in Q2 2017, when the country exited from recession, it was not buoyed by government policies, but rather rebound in oil prices.

“This calls for a more drastic management of the country’s economy from the global shock of oil prices. Creating enabling environment for the non-oil economy to be the major contributor to the revenue profile would salvage the economy from external shocks.”

The body said it anticipated a contraction of the economy in the second quarter as a result of the six-week lockdown emplaced by the government to contain the spread of COVID-19.

The statement reads further: “There is the need for the fiscal and monetary authorities to develop more aggressive and decisive policies to sustain an economic recovery in the wake of further low oil prices. We believe that more coordinated stimulus packages targeted at the worst-hit sectors of the economy would sustain the economy from experiencing contraction of 8.9 per cent as predicted.”