Nigeria, Africa’s biggest economy, officially slid into recession for the first time in more than 20 years as the Nigerian Bureau of Statistics (NBS) on Wednesday announced a further contraction in the second quarter of the year.
The NBS said that Gross Domestic Product (GDP) contracted by 2.06 percent after shrinking 0.36 in the first quarter.
It said the non-oil sector declined due to a weaker currency, while lower prices dragged the oil sector down.
A slump in crude prices, Nigeria’s mainstay, has hammered public finances and the naira currency, causing chronic dollar shortages.
Crude sales account for around 70 percent of government revenues, Reuters reported.
Compounding the impact of low oil prices, attacks by militants on oil and gas facilities in the Niger Delta since the start of the year has cut crude production by about 700,000 barrels per day (bpd) to 1.56 million bpd.
The government’s 2016 budget assumed 2.2 million bpd.
On Wednesday, the NBS said annual inflation reached 17.1 percent in July from 16.5 percent in June, a more than 10-year high – and food inflation rose to 15.8 percent from 15.3 per cent.
Nigeria’s sovereign dollar bonds fell across the curve to their lowest value in more than two weeks after the NBS released its data.
“The Nigerian economy contracted more deeply than we had expected in the second quarter,” said Razia Khan, chief economist, Africa at Standard Chartered bank.