The organised private sector has predicted some dire economic consequences for the nation, firms, and workers in the wake of the contraction of the economy by -6 percent in the second quarter of the year.
The Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry on Monday both said the development may constrain the government’s ability to service rising debts and fund budget.
The National Bureau of Statistics released its report on the gross domestic product for the second quarter on Monday which turned out –6.10 per cent (year-on-year) in real terms in the second quarter of 2020.
The decline was attributed to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.
Ambrose Oruche, the acting director-general, MAN, said the slippage into contraction means the government will find it difficult to service its debts as well as funding its programmes and projects.
Explaining further, he said the government will be unable to generate much revenue for the debt servicing just as revenue profile will fall thus making the government unable to fund its projects.
Muda Yusuf, the director-general, LCCI,, said the contraction has thrown the nation into a deep hole. He, therefore, called for an appropriate policy response to reflate the economy and remove the bottlenecks to productivity.
He also called on the government to tackle the challenge of rising inflation and unemployment rates, especially as inflation and unemployment are high at 12.82 per cent and 27.1 per cent respectively. Similarly, he said there was need for the synchronisation of fiscal and monetary policies and proper implementation of the sustainability plan among other measures.