The World Bank has predicted an impeding recession for Nigeria which could be the worst recession in 40 years. According to the World Bank, Nigeria is facing “potentially the most severe downturn in four decades…even if the outbreak is contained”.
The report was presented at a webinar tagged “ALIPA Webinar” which took place on August 27, 2020. Nigeria, the World says the double whammy of the oil price fall, and the COVID-19 pandemic has put Nigeria on the path to economic ruin and may not get out of it quickly if significant policy changes are not made. Oil price collapse, the report noted is destabilizing the economy and affecting fiscal and external balances, and growth.
The Covid-19 Pandemic has reduced foreign remittances and adding to the households’ loss of income and consumption. It also exclaimed that foreign capital inflows are also expected to decline adding to external payment pressures.
With the grim predictions, it projects a GDP contraction of -3% for 2020 “possibly triggering the worst recession in four decades.” The National Bureau of Statistics on Monday reported the Nigerian economy contracted by 6.1% in the second quarter of the year due to the Covid-19 pandemic and the crash in oil prices.
Already, the lockdown and border closure has negatively affected the economy as businesses furlough workers and enforce salary cuts. According to the bank, many Nigerians will fall below the poverty line especially those in the informal sector. On the way forward, the Bank suggested containing the coronavirus; enhancing macroeconomic management to boost investor confidence, safeguard and mobilise revenue as well as priorities public spending to protect development expenditures. The World Bank suggests improved foreign exchange management practices that will help conserve forex.