Nigeria recorded a Gross Domestic Product (GDP) growth of 1.87% in the first quarter of 2020, keeping pace with its average GDP growth rate of 1.88% over the previous 11 quarters. However, the economy was stopped in its tracks in Q2 2020 by the Twin Shocks of the COVID-19 pandemic and the significant reduction in the oil price.

At the end of the 2nd quarter, the Nigerian economy had contracted by 6.1% and this decline continued in the 3rd quarter of 2020 with a further contraction of 3.62% resulting in the economy going into a recession. However, the economy experienced some respite in the last quarter of the year with a GDP growth rate of 0.11%, which extricated the country from its second recession in five years and moderated the annual GDP growth rate to -1.92%. The recovery in the second half of the year was largely due to the positive growths recorded by the Agriculture, Information and Communication, and Financial Services sectors of the economy.

Despite the fall in oil demand in 2020 and the oil production cuts mandated by the Organization of the Petroleum Exporting Countries (OPEC), Nigeria achieved an average crude oil production level of 1.78 million barrels per day (mbpd) in 2020. This is close to the 1.80 mbpd estimated in the revised 2020 National Budget.

The oil sector contributed 8.16% to the country’s GDP in 2020, according to statistics published by the National Bureau of Statistics (NBS), while the non-oil sector contributed the balance of 91.84%.

The purchasing power of Nigerians deteriorated in 2020, as inflation remained in double digits and increased steadily from 12.13% (year-on-year) in January 2020 to a three-year high of 15.75% (year-on-year) in December 2020. The rise in inflation is largely attributable to the closure of land borders in 2019 and part of 2020, the increase in Value Added Tax (VAT) rate in February 2020, COVID-19 induced lockdowns and movement restrictions, rising insecurity and the depreciation of the Naira.

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