This study examines the impact of the recession on the Nigerian economy. The study’s population consisted of 40 persons who were chosen at random. Data was collected using a self-created questionnaire, and the results were analyzed using the simple percentage approach. The instrument’s validity and reliability were determined. The research demonstrates that the economic recession has a very detrimental impact on the Nigerian economy, and that the presidency is one of the key causes of the recession. According to information obtained from the people, he makes some decisions late, such as the selection of cabinet members. As a result, this study recommends that Nigeria change its economic structure and shift away from oil toward agriculture, value-added entrepreneurship, chemicals, and pharmaceuticals, develop the iron and steel industry, and revamp the machine tool industry for local fabrication of industrial tools in order to make economic progress. This will shift the economy’s structure to one of long-term growth, as well as the provision of infrastructure, high-quality education, inexpensive health care, reliable power, and human capital development.
BACKGROUND OF THE STUDY
The Nigerian economy entered recession in the second quarter of 2016, following two consecutive quarters of negative GDP growth. The Nigerian economy contracted by -2.06 percent in the second quarter of 2016, following a contraction of -0.36 percent in the first quarter, according to figures from the CBN and the National Bureau of Statistics (NBS). The economy has further sunk into recession by the fourth quarter of 2016, with GDP growth rates of -2.24 percent and -1.03 percent, respectively. Nigeria’s GDP fell by -2.06 percent in the second quarter, which was 1.70 percent lower than the -0.36 percent growth rate in the first quarter and 4.41 percent lower than the growth rate in the previous quarter. . When the Nigerian economy declined by 0.51 percent and 0.82 percent in two consecutive quarters in 1987 during the government of Ibrahim Babangida, this quick decline in GDP growth rate intensified the 2016 recession. Economic recession is defined as a downturn in the economy marked by symptoms such as exchange rate fluctuations, rising costs of goods and services, the government’s inability to pay workers’ salaries and other allowances or meet other financial obligations, and poor performance of other macroeconomic variables that define the state of the economy at a given time (Farayibi, 2016). The business cycle has an impact on every economy (country) (or economic cycle). In a free market system, the business cycle refers to medium-to-long-term oscillations in output, trade, and general economic activities across the economy (nationally). There is no government intervention in economic activity in a free market economy; rather, demand and supply interact to correct market disequilibrium (anomalies). The business cycle is defined as the upward and downward movement of GDP levels, as well as the period of expansions and contractions in the level of economic activity (business fluctuations) around the long-term growth trend. These swings in the economy encompass periods of relatively high development (boom) and periods of relative stagnation or decline over time (a contraction or recession). A recession is a contraction of the business cycle that refers to a two-quarter slowdown in economic activity. During a recession, macroeconomic indices such as GDP, employment, investment spending, capacity utilization, household income, company income, and inflation typically fall, resulting in an increase in the unemployment rate. A recession is defined as an economy that has had two consecutive quarters of negative real GDP growth. GDP is the market worth of all legally recognized final goods and services produced in a country during a specific time period, usually a year. The economic recession is a time of poor output, illiquidity, and unemployment in the economy. It is defined by its length, abnormally high unemployment, decreased credit availability, falling output and investment, numerous bankruptcies, diminished trade and commerce, and highly volatile relative currency value swings, primarily devaluations, financial crises, and bank collapse. Though the SAP’s failure is still visible in most African countries today in the form of rising poverty, its free-market doctrine lives on in the form of flexible exchange rates, market-determined interest rates in the financial sector, and the ongoing privatization of previously state-owned enterprises. For more than three years, the world economy has been undergoing one of the most catastrophic periods in decades. Although there appears to be a ray of light in certain sectors, the crisis’ scope has prompted analysts to label the situation as the greatest economic downturn since the Great Depression of the 1930s. For the first time in more than seven decades, the global economy has seen stagnation or low growth. The “hunt for yield” by financial institutions and investors was at the foundation of the recent financial disaster.
STATEMENT OF THE PROBLEM
This research looks at how the Nigerian people are affected by the economic downturn. In the early phases of a recession, productivity drops, then rises as weaker enterprises close. Profitability disparities between businesses are widening. Recessions have also facilitated anti-competitive mergers, which have had a negative influence on the economy as a whole.
Recessions have no more impact on persons who rely on earnings and salaries than on those who rely on fixed incomes or social payments. Losing a job has been shown to have a negative influence on family stability as well as individual health and well-being.
Small reductions in fixed income benefits are made, making it more difficult to subsist. The following are some of the consequences of Nigeria’s recession.
Manufacturing industries were operating at less than half of their full capacity.
Stock market prices have taken a terrible plunge.
As a result of the economic downturn, several industrial industries have shuttered.
The stocks of closed industrial industries and those operating at a loss
The stock market delisted a company with low capacity usage.
There was a significant drop in capital investment and a low level of foreign direct investment (FDI).
· Production cost was very high due to high bank interest rate, high naira exchange rate to US dollar and powering of production plant during a power outage.
OBJECTIVE OF THE STUDY
The primary goal of this research is to determine the impact of the recession on Nigeria’s economy. More specifically, the research will:
1. Research the causes of the Nigerian economy’s recession.
2. Examine the impact of the recession on the Nigerian economy.
3. Determine the impact of the recession on the government’s incapacity to pay employees’ salaries.
4. Propose a remedy to Nigeria’s recession situation.