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UPDATE 2-Nigeria's economy shrinks 6% in second quarter on oil crash, pandemic double whammy

Published 24/08/2020, 09:00
Updated 24/08/2020, 11:48

* Nigeria imposed lockdowns in Lagos and Abuja in Q2
* Oil sector contracted by 6.63%
* Nigeria is Africa's largest economy
* Government says economy may shrink by up to 8.9% this year

(Adds details, analyst quote, bullet points)
By Alexis Akwagyiram
LAGOS, Aug 24 (Reuters) - Nigeria's economy contracted by
6.1% in the second quarter of 2020 from a year earlier, the
statistics office said on Monday, with lockdowns in its two main
cities and low oil prices taking their toll.
The West African country - Africa's largest economy and the
continent's top oil producer - reported its first coronavirus
case in late February. Lockdowns were imposed for just over a
month in the commercial hub Lagos and the capital Abuja, ending
in early May.
"The decline was largely attributable to significantly lower
levels of both domestic and international economic activity
during the quarter, which resulted from nationwide shutdown
efforts aimed at containing the COVID-19 pandemic," the
statistics office said.
Crude oil production was 1.81 million barrels a day in the
second quarter, compared with 1.98 in the same 2019 period. A
global oil price crash due to reduced demand from the pandemic
saw the oil sector shrink by 6.63% in the second quarter.
The non-oil sector declined by 6.05%, which the statistics
said was the first decline in real non-oil GDP growth in nearly
three years.
Nigeria's economy was already grappling with sluggish growth
before the pandemic in the wake of a 2016 recession. The
International Monetary Fund has said it sees Nigeria's GDP
falling 5.4% this year, while the government expects the economy
to shrink by as much as 8.9%. "Given that lockdown measures have been loosened in recent
months and oil prices have picked up, Q2 might be the trough of
this year's recession in Nigeria," said John Ashbourne, global
emerging markets economist at Fitch Solutions.
The World Bank has warned that Nigeria potentially faces its
worst financial crisis in four decades due to the crash in oil
prices and the pandemic. However, the bank is also unlikely to
approve a much-needed $1.5 billion loan for Nigeria due to
concerns over desired reforms, sources familiar with the talks
told Reuters this month. Inflation in Nigeria rose to 12.82% in July, its highest
level in more than two years, and the unemployment rate stood at
27.1% in the second quarter, according to data released earlier
this month.

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