Economy grows by 2.5 per cent, stops technical recession

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Economy grows by 2.5 per cent, stops technical recession

Nigeria and South Africa have both exited recession, notching up economic growth of 0.6 percent and 2.5 percent respectively in the second quarter, official data showed on Tuesday.

The mining industry expanded by 3.9 percent on the back of increased production of coal, gold and other metal ores such as iron ore and manganese ore.

Economists polled by Reuters had expected a quarter-on-quarter GDP expansion of 2.1% and a year-on-year expansion of 0.4%.

In contrast, general government services decreased by 0.6 per cent and contributed -0.1 of a percentage point to GDP growth.

"Though Nigeria has been on the path towards recession since mid-2014 due to a combination of factors, including the total dependence on a mono product - oil - and the failure to save during the boom years, the country officially slipped into recession in the 2nd Quarter of 2016".

But overall, its economy still continues to struggle with unemployment remaining stubbornly high at almost 28%, the BBC's Africa Business Report editor Matthew Davies says.

An economy is said to be in recession after contracting for two consecutive quarters.

Q2 GDP Growth up at 0.55%.

"It will be sustainable if the fiscal elements of the budget are implemented and the Central Bank of Nigeria pursues a monetary policy which will reduce interest rate to stimulate investment".

In South Africa, the continent's most-industrialised economy, low demand for its commodity exports and political turmoil have weighed on output.

President Jacob Zuma last month said 2017 growth would be below 0.5 percent, down from a forecast of 1.3 percent in February, after the poor first-quarter numbers.

On the expenditure side, household final consumption grew 4.7 percent over the quarter, while gross fixed capital formation decreased by 2.6 percent.

Nigeria had been in recession since previous year, with five quarters of negative growth.

Nigeria is finally out of economic recession, according to latest figures from the National Bureau of Statistics (NBS).

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Treasury said it believed that the efforts of the 14-point Action Plan and continuing work through the economic cluster, could set the country on a higher growth trajectory.

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