GDP- Understanding the Chicken Run
Nigeria’s GDP has had an interesting run as it has dipped and swerved from optimistic growth to scary depression, back to growth, and then on to depression in 2020. Before 2015, the economy’s growth engine had purred at a nice pace of slightly over +6% as it drove smoothly along an upward trajectory from an average of +6.23% in 2014 but slipped to an average of +3.2% in 2015 and slammed the brakes as it skidded into a recession between 2016 and Q1 2017.
GDP fell from -0.67 in Q1 2016 to -1.49% in Q2, -2.34% in Q3, and -1.73% in Q4 by Q1 2017 GDP saw a slight but still negative recovery of -0.91%. As the global recession passed by in Q2 2017 and GDP growth ramped up to +0.72%, the economy appeared to be on the mend even though the population growth rate was plodding ahead at a disturbing +2.6% per annum.
The harsh times of 2016 left the jobless rate up in double digits, while domestic consumption stumbled and manufacturers saw net sales slide, the purchasing manager’s index (PMI) equally took a knock. The GDP growth reversal in 2017 put smiles on manufacturers’ faces as output rose as the jobless rate started to fall with GDP growth rising from +2.11% in Q4 2017 to +1.95% in Q1 2018 and +2.38% in Q4 2018. In between Q1 and Q4 2018, the growth rate fell to +1.5% in Q2 and +1.81% in Q3.
Manufacturers and workers were optimistic that 2019 would prove better than the previous year, 2020, and they were right. GDP rose by +2.1% in Q1 2019, +2.12% in Q2, +2.28% in Q3 and +2.55% in Q4. The first quarter of 2020 saw GDP growth rate climb by +1.87% before the coronavirus outbreak led to a reversal with Q2 2020 witnessing a major contraction as GDP growth slid by -6.10% before retracing its steps in Q3 2020 with the growth rate slowing less rapidly by -3.62%.
Nigeria’s GDP chicken run over the last seven years has reflected uncontrollable external factors and perfectly controllable policy choices. The country’s fiscal and monetary policies have often been out of alignment and the route to desired economic prosperity has been littered with hope rather than logic, ethnic bias rather than a competitive advantage, and favouritism rather than competence.