The Federal Government has confirmed that the country’s economy is ‘technically’ in a recession.
The Minister of Finance, Mrs. Kemi Adeosun, who appeared before the Senate on Thursday, said the current indices in the country had shown that there was an economic downturn.
According to her, Nigeria is technically in recession but it will be a short one.
She said; “Technically if you go into two states of negative growth, you are in recession but I don’t think we should dwell on definitions. I think we should dwell on where we are going. We will come out of it and it will be a very short one because the policies that we have will ensure we don’t go further into it”.
Here are five things this means for the average Nigerian on the streets…
Slump in the market – People would find it difficult to buy goods and services as their purchasing power will be reduced due to unemployment. This will invariably lead to a slump in the market as producers will produce less, meaning less profits for producers.
Fall in Stock price – Several investments would suffer as a result of this because investors will avoid investing in companies that might be at a risk of suffering losses during this period.
Companies closing down – While bigger companies may be able to withstand the crisis, several small companies will be forced to shut down as they will be making less profit.
Increase in unemployment – During a recession, the number of unemployed people would increase as firms go bankrupt. As a result of this bankruptcy, some companies will be forced to downsize. This is already happening in Nigeria. Several companies are laying off staff as a result of the current economic situation on the country. According to the recent report on unemployment released by the National Bureau of Statistics, the number of unemployed people in the country has increased to over 1.45 million.
Increase in national debt – During recessions the government is usually forced to divert tax payers money meant for development to bailing out companies that cannot survive on their own.
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