NECA Predicts Possible Economic Contraction in Q2

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SWITZERLAND, MAY 26 – The Director-General of the Nigeria Employers Consultative Association, Dr. Timothy Olawale has charged the fiscal and monetary authorities to formulate a more aggressive and decisive policy to support the economy in the event of a protracted decrease in oil price.

Olawale made this known on Monday in a statement observed by a Today’s Echo respondent

According to him, the call made was because the association presaged a contraction in the second quarter, as the economy embarked on a six week lockdown in the commercial hubs of the country.

He made reference to a similar trend witnessed in the global economy, except China, whose consumption of fuel due to the opening of industrial hubs and transportation could signal hope for a mild positive growth pattern due to demand for crude oil.

The statement read in part, “We anticipate a contraction in the second quarter, as the economy witnessed a six-week lockdown on the commercial nerves of the country.

 “There is the need for the fiscal and monetary authorities to develop more aggressive and decisive policies to sustain economic recovery in the wake of further low oil prices.”

The NECA boss stressed the need for stimulus packages to be granted to worst-hit sectors of the economy in order to avoid contraction.

He predicted that more coordinated stimulus packages should be channeled to these sectors to prevent a contraction of 8.9 percent.

Olawale mentioned that the Nigerian economy faced a grave threat, like every other economy in the world, most especially oil-dependent economies.

He noted that this indication of the headwinds the economy was facing from the coronavirus pandemic and low crude price occasioning a fall in government revenue.

The DG also pointed out that the Gross Domestic Product growth reflected the earliest effects of the disruptions on the non-oil economy, coupled with an escalating war of words between the US and China which resulted in low demand for oil.

 “The lockdown of the Nigerian economy commenced in April due to the pandemic. Therefore, the real impact of COVID-19 on the economy would be felt in the Q2 GDP result,” he added.

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