Nigeria, the African continent’s largest economy, has slipped into recession, causing a halt in forecasts of increased fiscal health for not only the nation, but the region.
The country’s government released data on Wednesday showing its gross domestic product declined by 2.06 percent in the second quarter of the year. The oil- and import-dependent economy also declined by 0.36 percent in the first quarter.
“It’s the worst possible time for us. Are we confused? Absolutely not,” Nigeria’s finance minister Kemi Adeosun told reporters after a meeting with the Financial Executive Council. “It’s a difficult time for Nigeria but I think Nigeria is in the right hands and if we can stick with our strategy…We still have some adjustments to make. I think we need to make some adjustments in monetary policy.”
It is the West African country’s first recession since 1991, according to Central Bank data.
Nigeria has been slammed by low petroleum prices, attacks by oil militants and foreign currency shortages.
The bleak numbers were “mostly due to a sharp contraction in the oil sector due to huge losses of crude production” resulting from vandalism and “sabotage,” an economic adviser to President Muhammadu Buhari, Adeyemi Dipeolu, said in a statement.
The new data from the National Bureau of Statistics put estimated oil production at 1.69 million barrels per day, down by 0.42 million barrels per day from the first quarter.
Nigeria’s non-oil sector also declined by 0.38 percent, and analysts stressed that the country’s problems are broader than oil.
“More important than the headline number is the fact that almost all key sectors of the economy are now struggling,” John Ashbourne, Africa economist at London-based Capital Economics, said in a note distributed Wednesday.
Many declines, apart from the oil sector, were due to Nigerian government policy, Ashbourne said.
Buhari was criticized for insisting the Central Bank defend the naira at a fixed rate of 197 to the dollar before finally floating the currency in June.
Ashbourne also cited import restrictions that have harmed manufacturing and foreign exchange policies that have discouraged investment.
The statistics bureau said the $647.1 million of capital imported into Nigeria during the second quarter, a provisional figure, “would be the lowest level of capital imported into the economy on record.”
Ashbourne said the economy likely will “continue to shrink” this year.