Economy contracts by 0.36% in Q1 2016

Nigeria’s gross domestic product, GDP, contracted by 0.36 per cent in the first quarter of 2016 after growing 3.96 per cent in the same period last year, the head of the Nigerian Bureau of Statistics, NBS, said on Friday.
Similarly, within the same period, the total number in full time employment (did any form of work for at least 40 hours) decreased by 528,148 persons or 0.97 per cent.
This consists of people who lost their jobs and were either forced or for various reasons chose to move from full time employment to underemployment.
These statistics were contained in the first quarter report released by the National Bureau of Statistics, which clearly indicated that Africa’s biggest economy is going through its worst economic crisis in decades, caused by the sharp fall in oil prices.
Nigeria relies on crude oil sales for around 70 per cent of national income and low prices have cut government revenues.
The economy’s contraction in the first quarter of 2016 compares with growth of 2.11 per cent in the fourth quarter of last year. Annual inflation quickened to a near six-year high of 13.7 per cent in April.
Currency curbs were introduced by the central bank last year in an attempt to conserve dwindling foreign exchange reserves.
Further analysis shows that the drop in full time employment between Q4 2015 and Q1 2016 was predominantly those within the ages 15-24 years accounting for a decline of 0.56mn followed by ages 55-64 years (decline of 0.09mn), ages 45-54 years (decline of 0.06mn) and ages 35-44 years (decline of 0.02mn).
On the other hand, the numbers of those in full time employment between Q4 2015 and Q1 2016, within ages 25-34 increased by 0.22mn, according to the report.
The report continues by noting that the number of underemployed in the labour force (those working but doing largely menial work or jobs not commensurate with their qualifications or not fully engaged and merely working for few hours-less than 20hours) during the review quarter however, increased by 607,613 persons resulting in an increase in the underemployment rate to 19.1 per cent in Q1 2016 (15.02mn persons) from 18.7 per cent (14.41mn) in Q4 2015.
President Muhammadu Buhari has rejected calls by the International Monetary Fund, IMF for a more flexible exchange rate.
The naira is officially pegged at between 197 and 198 per dollar, but has fallen 40 per cent below that level on the parallel market.
The central bank’s monetary policy committee will meet on Monday and Tuesday, May 23 and 24.
Speculation that the naira may soon be devalued has grown since the vice president said last week that currency policies needed to change to encourage investment.


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