Prevailing economic challenge has resulted to the rising inflation of oil.
Nigeria’s economy has been weakened by persistent economic problems, as evident by the business environment and rising inflation, which are further exacerbated by subpar oil production over the past three months, according to official data. The Gross Domestic Product (GDP) grew by 2.25 percent year over year in Q3,2022, which is the slowest growth since the COVID-19 pandemic. The National Bureau of Statistics (NBS), which released its most recent report on GDP yesterday, attributes the poor growth to the fundamental consequences of the crisis and the difficult economic circumstances that have stifled productive activities. According to analysts, the biggest burden on the economy is a decrease in oil and gas output brought on by platform repairs, security issues, and sabotage.
According to some, if the problems don’t get better, the nation might be on the verge of another recession. From the 4.03 percent growth rate observed in Q3, 2021, the Q3, 2022 growth rate dropped by 1.78 percent points, and by 1.29 percent points from the 3.54 percent growth rate observed in Q2, 2022. As of Q3,2022, the oil and gas sector shrank by -22.67% (year over year), which is a fall of 11.94% points from the rate seen in the same quarter of 2021.
Oil production volume has been below one million barrels a day.
In comparison to the same period in 2021, when Nigeria was producing up to 1.5 million barrels per day of crude oil, oil production output has dropped below one million barrels per day until the beginning of the fourth quarter. The Organization of Petroleum Exporting Countries set a production quota of 1.8 million bpd, which Nigeria now falls short of (OPEC). Contrarily, during the reference quarter, the non-oil industry rose by 4.27 percent in real terms (Q3,2022). This rate is 0.50 percentage points lower than the second quarter of 2022 and 1.18 percentage points lower than the rate seen in the same quarter of 2021.
Financial and insurance institutions, trade, transportation (road transport), agricultural (crop production), and real estate were the key drivers of growth in the non-oil sector, which contributed to positive GDP growth. The non-oil sector increased its share of GDP to 94.34 percent from the preceding sector’s 93.67 percent, while the oil sector contributed 5.66 percent to the total real GDP over the period. The most recent GDP figures unmistakably show that the economy is technically in a recession, according to Kelvin Emmanuel, chief executive officer of Dairy Hills Limited.
It takes a shorter time of 3.2 years for the rate of inflation to double.
According to Emmanuel, the fact that the GDP adjusted for inflation fell from 4.03 percent to 2.25 percent, a decrease of 1.78 percent, is evidence that the bond yield curve is inverting, and the economy is technically in a recession. He continued that to the rule of 72, it takes 3.2 years for the rate of inflation to double and currency to lose 100% of its value as opposed to 32 years for the GDP to double. The increase in core inflation to 21.09% and the decline in gross domestic product to 2.25 percent.
Going back in time, Emmanuel suggested that, in 2014, with a GDP of 6.3%, it would take just 11.4 years to double and, in contrast, 8.9 years, or 394%, for the currency to lose 100% of its value. This is evidence that a government’s pursuit of an expansionary monetary policy without regard for the regulations and precedents set forth in the Fiscal Responsibility Act and the Central Bank of Nigeria (CBN), as well as internal and external factors that have impacted production output, have made it challenging for monetary policy tools to reduce inflation in a setting characterized by helicopter money and the policy summersault of both raising C and C. This is a puzzle!
There are many uncertainties in the nation’s economy.
The nation’s economy, according to financial analyst Mustapha Suleiman, is very fragmented. He claimed that the coordination required to control the many aspects of the economy has not been present. The expected cooperation between those responsible for monetary and fiscal policy does not appear to exist under this administration. ICT has helped important economic sectors recover after the pandemic, according to telecoms expert Kehinde Aluko, who was speaking about the growing contribution of ICT to GDP. He claims that ICT has consistently offered a way out of difficult situations, and because of this, stakeholders feel that the ICT sector’s performance will continue to improve.
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The decline in the oil and gas industry as a result of the nonchalant of the government. They have failed to regulate the industry and also failed to curb oil theft. The president is the minister of petroleum and he has done nothing to prove efficacy of his office.
The decline in the oil and gas sector which is one if the major pillars of the economy is alarming. As predicted by experts, there might be another recession if there’s no significant improvement.
Persistent economic troubles have had a negative impact on Nigeria’s economy, as seen by the country’s business environment and the country’s rising inflation rate.
Because information and communications technology has always been able to provide a solution to a problem, industry participants believe that the sector’s performance will continue to get better over time.
One of the economy’s mainstays, the oil and gas industry, has been experiencing a precipitous fall. If things don’t start looking up, analysts have projected another recession.
Oil and gas business downturn due to government indifference. They’ve neglected industrial regulation and oil theft. The president is the petroleum minister, but he hasn’t proven his office’s efficacy.
The business climate and the country’s rising inflation rate are two indicators that Nigeria’s economy is suffering as a result of the country’s ongoing economic difficulties.
According to official data, Nigeria’s economy has been weakened by ongoing economic issues, which are further exacerbated by subpar oil production over the past three months. These issues are evident in the business environment and rising inflation.
Inflation is a bad omen to the economy of any nation and Nigeria is not left out on this because the price of oil and the production that is not stable.
The most significant drag on the economy is the drop in oil and gas production that has been brought about by platform repairs, security concerns, and sabotage.
Considering the information and communications technology has always been able to provide a solution to a problem, industry participants believe that the sector’s performance will continue to get better over time.
Under the current administration, there does not appear to be the level of collaboration that would be expected between those responsible for monetary policy and fiscal policy.
In an environment where production output has been damaged by both internal and external forces, monetary policy measures have struggled to bring inflation down.
They haven’t been able to control oil theft or ensure industry regulation. The president, in his capacity as minister of petroleum, has failed to demonstrate the value of his position.
You see when government refuse to do the needful, it will result to what is happening now. When the basic needs of the masses are met, it will breed armed robbery, oil pipe vandalizes, Boko Harams, fulani herdsmen etc.which invariably lead to economic failure.
These issues are evident in the business environment and rising inflation .If things don’t start looking up, analysts have predicted another recession.
Our political leaders are the major problems of Nigeria. If the needful is done by our government rather than enriching themselves, it wouldn’t have resulted to the kind of inflation we are experiencing today. Oil pipe vandalizers wouldn’t have existed, oil theft wouldn’t have existed.
All this oil theft are really causing alot of trouble they are one of the reason of inflation in oil our government need to do something, they should do the needful thing rather than just caring about themselves alone
The fact that ICT has always been able to solve an issue has led many in the business to anticipate even greater future success for the industry as a whole.
Prevailing economic challenge has resulted to the rising inflation of oil.We really need to look for a way to better this country in all ramifications