GDP: Number reflects gradual normalisation of economic activities – Economist

An economist, Dr Muda Yusuf, has said Nigeria’s 5.01 per cent Gross Domestic Product (GDP) growth reflected a gradual normalisation of economic and business activities in the country.

Yusuf said this in reaction to the year-on-year GDP figure reported by the National Bureau of Statistics (NBS) on Thursday.

He said the outcome signposted an incremental recovery in the economy.

“The 5.01 per cent GDP growth (year-on-year) is a welcome development, however, it is important to stress that there is a profound base effect in the Q2 GDP growth outcomes.

“The Q2 2021 figures compared with the worst contraction the economy suffered in recent history, which was 6.3 per cent in Q2 2020,” said Yusuf.

He explained that the period was when the economy was completely shut down because of the pandemic.

“The GDP growth is largely an indication of the restoration of economic activities as the Nigerian economy is still essentially in a recovery phase.

“The major drivers of the growth numbers are not significant contributors to the GDP, except the trade sector.

“Meanwhile,  the biggest contractions were from oil refining, 47 per cent;  crude oil and gas, 13 per cent; this reflects the enormity of the challenges faced by investors in the sector,” he said.

Yusuf stressed that the GDP numbers suggested the need to reset, rejig and reform key sectors of the economy.

He highlighted the need to fix issues around regulatory and tax environment and the multitude of levies imposed on businesses by all levels of government; foreign exchange policies, ports environment and other structural bottlenecks to productivity in the economy.

“There are still worries about the macroeconomic challenges reflecting in spiralling inflation, weakening of the currency, forex market illiquidity, spiking debt profile, among others.

“The security situation remains a major source of risk inhibiting investments whether domestic or foreign.

“It is good to celebrate the GDP growth numbers, but this should be done cautiously as the impact of the GDP growth on citizens welfare and the productivity in the investment environment are crucial.

“These are the metrics that matter most, ultimately.  The GDP figures are not ends in themselves, they are means to an end,” he said. (NAN)