The Nigerian Economic Summit Group (NESG) has said the economy will shrink by 5.2 percent this year.
It called for effective implementation of palliative measures designed to mitigate the effects of COVID-19 on the economy.
The NESG board of directors reviewed the global and domestic economic, financial, and social environments for the half-year (January-June) 2020 as well as the outlook for the rest of the year.
Board chairman, Asue Ighodalo, said in a statement: “The Board notes the expectation, based on the International Monetary Fund’s projection, that the Nigerian economy will shrink by 5.2 percent in 2020.”
The Board noted that economic growth slowed to 1.9 percent year-on-year in H1 2020 (half year), representing its weakest level since Q2’2018.
It said 29 percent of the economy contracted, compared to 13 percent in the same period a year ago.
NESG said: “A review of performance by the various economic sectors showed that the top contributors to economic growth in H1’2020 are: telecoms (52.5 percent), financial institutions (34.9 percent), crude petroleum & gas (24.9 percent) and crop production (24.4 percent).
“The Board also notes the positive inference to be drawn from more recent data showing growth in Value Added Tax (VAT) collection and Federation Account (FAAC) receipts.”
NESG noted the country’s very high debt service-to-revenue ratio.
It said: “While this ratio has improved to 72 percent in May 2020 from 99 percent recorded at the end of March 2020, it remains unsustainably high and undermines the ability of government to meet non-debt obligations…
“As it acknowledges the Federal Government’s drive to improve revenue performance at all levels of the public sector, the Board advices that this drive should be done in such manner that the adverse effects of the COVID-19 pandemic on businesses (large and small, and households) isn’t worsened.
“Furthermore, attention must be paid to the efficiency and effectiveness of government spending.
“There is also a need to intensify efforts at providing an enabling environment and attracting investment (domestic and international) needed to stimulate output growth and ultimately revenue.”
NESG said Nigeria continues to deal with the impact of COVID-19 pandemic.
