By Babajide Komolafe
The federal government needs to urgently implement policy measures to stimulate economic growth in order to forestall another slide into recession.
FSDH Merchant Bank, presenting its Monthly Economic and Financial Market outlook for September to financial press last weekend stated that the real Gross Domestic Product (GDP) growth rate of 1.5 percent recorded in the second quarter of 2018, Q2’18, was below the expectations of most analysts.
The bank’s head of research, Mr Ayodele Akinwunmi stated, “Although the fragile growth was driven by the Non-Oil sector, the fact that dominant sectors of the economy either recorded low growth or contracted in Q2’18 indicates that urgent actions are required. Agriculture, which is the largest sector of the Nigerian economy at 22.86 percent, recorded a marginal growth of only 1.19 percent.
He added: “FSDH Research notes that the slow growth in the Agriculture sector, if not checked, may lead to food shortage in the country and consequently escalating food prices and rising inflation rate.
“Trade, which is the second largest sector of the Nigerian economy, contracted by 2.14 percent and also entered a recession in Q2’18. The weak purchasing power in the country is responsible for the contraction in the Trade sector. Improvement in the business environment that can lead to job creation and payment of salary of workers, particularly among the state civil servants, will stimulate purchasing power.
“FSDH Research observes strong growth in the Information & Communication and the Construction sectors of the economy. The contraction in the Real Estate sector can be reversed if government at all levels partners with private sector operators to provide affordable housing units for Nigerians. The current low GDP growth rate is not strong enough to stimulate credit creation. It has also increased the risk of doing business in Nigeria. Therefore, urgent measures are required so that low GDP growth rate does not become a new norm in Nigeria.”