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The GDP, which is an acronym for Gross Domestic Product, is defined as the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. It is the ultimate scorecard of how well our nation is doing. Sadly, thanks to wrong leadership, gross mismanagement, and the global COVID-19 pandemics, we are not doing well, as it is. Normally our economy is expected to grow incrementally as every quarter passes us by, but when it doesn’t, consecutively, we say, in macroeconomics, that we are in a recession. A Recession is generally a period of job losses, inflation, uncertainties, high debt and temporary economic decline. Also, most trade and industrial activities are reduced. Beyond recession is a depression. Depression is a long period of recession. Throughout history, natural disasters, pandemics or bad economic policies or unfavourable disruptions have been the major causes of most recessions. Ours is mainly caused by ill policies or the mismanagement of macro-economic crisis that affects major sectors of the economy. Historically, Nigeria’s first recession was in 1966 lasting 3 years, ending in 1968. In fact, it was a depression. It was caused by the political instability and successions of coups. This eventually led to the bloody two and half years of civil war. Prior to it, oil had just been discovered in Nigeria but the Biafran War crisis and the corresponding embargo placed on the secessionist East in mid-1967 led to weakening in the chances of exploiting, optimally, the oil output. Thanks to the war, came the damage of capital, death of millions of humans, disruption of trade, and the destruction of properties. These were triggers of the first recession. After the war came stability and growth. Nigeria enjoyed some level of prosperity in the 70s. The oil boom of the 1970s was responsible for revenue, but also the emergence of disorderliness in Nigeria. There was a remarkable increase in foreign exchange earnings during the oil boom era. Right around it, in 1975, we experienced our second recession. This lasted for a year. It was also the year of a bloodless coup. Two years later, in 1978 we experienced another recession, which also lasted for a year, this time. It was caused by falls in oil prices. Within two years again, we found ourselves in another depression. It was the second depression in our great history. Once again it was plagued by a shift in political power. This depression lasted for years spanning from 1981 to 1984. A major part of the 80s saw a global crisis in the Middle East that played in our favour as oil producers. In between all of these prosperities and recessions, we really didn’t diversify our economy. We were mainly dependent on oil. And even in the value chain, we didn’t quite have a thriving midstream and our upstream was mainly played by a foreign multinational firm that didn’t care much about our national interest. We saw another depression in 1993, ending in 1995. 1993 also saw the nefarious leader, Sani Abacha, come into power. It was a dark period. International embargos were placed on us as looting thrived. There was also a disregard for human rights and a lack of support for the private sector. This affected our economy.
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After the death of Abacha and the restoration of Democracy, we saw a decade of glory as Obasanjo tried to restructure major parts of the economy. Debts were forgiven; the telecom sector saw a boost with the advent of the GSM network as well as the attempt of privatization of major areas of our infrastructural holdings. Our economy was in a steady growth but then came 2016. In 2016, we slipped into a recession in the second quarter of that year and that recession maintained a downward (negative) growths through the rest of the year. Recessions are not new to Nigeria or Nigerians. So, we always assume or expect that it, too, shall pass. Usually, an economic recovery follows a recession as the economy adjusts and recovers. But there will always be gains lost and massive job cuts during a recession. The indicators of economic recovery include employment decline, higher debt profiles by businesses and general panic and loss of confidence by investors. But there is usually a recovery. It is also important to note, there are different types of economic recessions and their corresponding recoveries. These recession and recovery types are based on different alphabetical letters shape, business cycle curves.
- The V-Shaped Recession: The economy suffers through a sharp recession but quickly recovers. It is usually caused by minor political crisis and natural disasters.
- The U – Shaped Recession: The Economy takes a much longer period of time to recover (usually in the neighbourhood of 12-2 government, usually caused by financial crises and major political crises (Overthrow of a democratically elected government).
- The L – Shaped Recession (Depression): Sharp recession, followed by years of stagnant growth (5-10 years) Stagflation, high unemployment of over 25%, and high crime rate.
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