Reality Check: How economic recession affects the common man

Definition of terms

Recessions is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP (Gross Domestic Product) in two successive quarters.

Economy is the state of a country or region in terms of the production and consumption of goods and services and the supply of money.

Economic Recession: Economic recession is a period of general economic decline and is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. Generally, a recession is less severe than a depression. The blame for a recession generally falls on the federal leadership, often either the president himself, the Central bank governor, or the entire administration.

What IMF Said about Nigeria’s economy

The international Monetary Fund has projected on Tuesday 19/07/2016 that the Nigeria Economy will most likely contract by 1.8% this year. If that fore cast comes to pass, it will be the first time in about 26 years that the nation Economy will record such a low level of growth. Consequently, the global financial leader has cut its 2016 growth forecast for Nigeria from the 2.3% projected in April.

Nigeria economy is now projected to contract in 2016, as the economy adjusts to foreign currency shortage as a result of lower oil receipt, low power generation,

The sharp fall in global prices since 2014 has led to a prolonged economic crisis since the crude sales make up around 70 percent of government revenue.

Gross domestic product contracted by 0.36 percent in the first quarter of the year and the central bank’s governor has said a recession appears to be imminent.

The reason for IMF projection

In 2016, regional output growth will fall short of population growth, implying declining per capita incomes,” it said. Nigeria’s economy has been battered hard by the plunge in oil prices, the main source of the country’s income, as well as prices of other key commodities. In addition, rebels in the southern oil region have forced crude production cutbacks, and internal unrest, especially attacks by the Boko Haram group in the north has also hurt the economy.

Inflation hit an 11-year high of 16.5 percent in June as prices of food and energy jumped after the government freed up the naira currency in April, allowing it to plummet against the US dollar.

Also weighing in on output have been electricity shortages due to rebels’ sabotage of the gas pipelines that fire power plants.

What did Economist said about Nigeria’s Economy

An economist, Prof. Ben Aigbokhan, has predicted that Nigeria’s economy would recover from depression as soon as possible with the measures being put in place by President Muhammadu Buhari.

Aigbokhan, the President, Nigeria Economic Society, made the prediction in an interview with the News Agency of Nigeria (NAN) in Abuja on Sunday.

He praised the Federal Government for not folding its hands and doing everything possible to improve the living conditions of Nigerians.

“The government wants to be seen to achieve something and will not allow the economy to be nose-diving as to come to minus 1.8 per cent in the last quarter of the year.

“I think between now and the last quarter the government is going to release some amount of money for the capital projects.

“So, the government will want to be seen doing something, that is why I’m optimistic that the country will come out of recession,’’ he said.

The economist, however, disagreed with the International Monetary Fund’s (IMF) forecast that Nigeria’s economy would probably contract by 1.8 per cent in 2016.

“Also with the oil production picking up, some more revenue will be coming in gradually.

“I don’t expect government to spend the revenue on social things but government should spend it on developmental projects,’’ he said.

He stated that the release of funds for capital projects would enhance some level of growth in the nation’s economy.

The implication of Economic Recession to the common Man

Job loss affects the stability of families and individuals, with unemployment rates running extremely high during a recession, individuals and families struggle to find work to pay the bills each month. The inability to find work can be frustrating, terrifying, and depressing, and can lead to even more problems. When a parent is unemployed, things can seem bleak.

 Lifestyle Changes Reduced income leads to reduced entertainment, dining, and extracurricular activity expenses. People cut back on extras during a recession, so many families must make drastic changes to their pre-recession lifestyle. This means fewer trips, shared experiences, and missed opportunities because of a lack of funds.

Credit and Debt During a recession, families must still pay the household bills, and try to get out of debt. Bankruptcy, judgments, and late payments can all hurt your credit score.

Your credit history impacts credit card and loan interest rates, insurance rates, and even job opportunities, as some companies review applicants’ credit histories.