Nigerian economy slows in Q2

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Growth in the Nigerian economy, Africa’s largest, slowed in the second quarter due to the slump in oil prices, the NBS office said.

Gross domestic product expanded 2.35 percent on an annual basis, compared to 3.96 percent a quarter earlier, the head of the National Bureau of Statistics, Yemi Kale, said on his Twitter account on Tuesday.

The oil industry contracted 6.8 percent, Kale said.

“This is not a good result for Nigeria,” Alan Cameron, a London-based economist at Exotix Partners LLP, said in e-mailed comments. “Moreover, with policy rates stuck at high levels, and fiscal policy being tightened automatically through lower statutory oil disbursements, it is hard to see any catalyst for improvement.”

The central bank raised its key interest rate to a record high of 13 percent in November, since when inflation has accelerated beyond the bank’s target band of 6 to 9 percent.

The government “can no longer pretend that this is just business as usual with a minor or temporary slowdown,” Cameron said.

The oil-price slump has forced Africa’s top crude producer to cut its budget and deplete foreign-currency reserves to stem depreciation in the currency, which has declined 7.8 percent against the dollar this year. The Nigerian Stock Exchange All Share Index fell to the lowest in six months on Tuesday on concern that oil prices near a six-year low will deepen the country’s economic challenges.

Manufacturing contracted by 3.8 percent during the quarter, compared to a growth of 14 percent a year ago, Kale said.

Nigeria’s President Muhammadu Buhari, who took office in May in the country’s first democratic transfer of power, has yet to name a cabinet and hasn’t articulated his economic vision for the nation.