Analysts Question Exit From Recession As Currency In Circulation Dips

By Ikenga Chronicles September 12, 2017

Analysts Question Exit From Recession As Currency In Circulation Dips

Analysts have questioned the indices used by the National Bureau of Statistics (NBS) to state that the country has exited recession while the recession situation and traits still exist.

Ikenga Chronicles recall that the NBS last Tuesday said the nation recorded an aggregate GDP(Gross Domestic Growth) of N26.986 trillion in the second quarter of the year to exit recession as against the figure recorded in the corresponding period of 2016 which stood at N23.548trillion, resulting in a nominal growth of 14.6 per cent.

However, in his reaction, a Development Economist and Economy analyst, Mr Odilim Enwegbara, questioned the indices used by NBS to justify the country’s exit from recession, saying “an average man has not got a job and those working have not got their salaries.”

He added: “I don’t agree in principle that we have exited recession. To come out of recession, you need two consecutive growths in GDP, just the same way you have two consecutive negative growths to slip into recession.

“There are two types of growth, which the economy can witness: vertical and horizontal economic growth in combination. When you have a vertical economic growth, the economy can be growing without trickling down, without real growth. If the growth is a vertical growth, it has a multiplier effect without a trickle-down effect.

“But if it is a horizontal growth, it is a more inclusive growth because we have both trickle-down and multiplier effects.

“So I don’t know the type of growth we have or what has generated the growth. Is it improvement in power? Is it improvement in infrastructure? Is it real sector growth that has driven the economy? Is it financial speculation? Is it possible that we have borrowed money to inject into the economy so that we are witnessing a growth? Is it inflation-driven growth? You may have a growth but inflation can eat up the whole growth,” he added.

Meanwhile, a Central Bank of Nigeria statistic reveals that money circulation in the country is still insufficient as the hardship still persists. According to the stat, currency in circulation dips to an all time low of N1.77 trillion from N22.54 trillion witnessed last year.

The stat showed that the currency in circulation in April, May and June, the three months that make up the second quarter when the recession ended, declined from N1.976 trillion to N1.898 trillion and N1.874 trillion in that order, down from N20.728 trillion, N20.722 trillion and N22.078 trillion recorded the same period last year.

But last July, the first month after the recession, the currency in circulation–N1.77 trillion–almost paled into insignificance when compared with the more than N22.535 trillion recorded same period in 2016.

This according to analysts may have explained the cash crunch which most Nigerians are experiencing as disposable income has been wiped off and low purchasing power is now the order of the day in most households.