‘Despite Recession, COVID-19 Disruptions, Yuletide Spending Patterns Remains Strong’

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By Raheem Akingbolu

Despite the impact of the COVID-19 as well as the recession the economy entered into recently, analysts have stated that consumer spending ahead of the yuletide remains strong.

Head, Investment Banking, Cordros Capital Limited, Mr. Femi Ademola, in an interview with THISDAY, said the current recession was caused mostly by the Covid-19 pandemic, adding that it is a temporary occurrence.

“The current recession in Nigeria and other countries is caused mostly by the pandemic which resulted in economic lockdown and reduced demand in many situations. But this indicates it is a temporary occurrence and may not really affect the economic structure significantly,” he said.

Describing recession as an economic event that depends solely on the reported GDP, Ademola pointed out that in several of developing economies with very large proportion of informal economy, the realities may be far different from what the economic data is saying.

He argued that the current recession in Nigeria doesn’t look as biting as that of 2016, when oil price decline combined with the government policy of curbing revenue leakages put a serious constraint on consumers’ liquidity.

He explained: “Unlike now, markets were not as bubbly and the roads were not as busy as they were during the end of 2016. Indeed, despite the so-called recession, there are still significant activities at the moment, businesses are still thriving and the reality of the recession doesn’t appear to be very glaring.

“Therefore, while the economy is in recession, the impact on consumer spending won’t be so significant, arguably due to the huge informal market in Nigeria.”

A Business Coach and Banker, Akin Oluwadare Jnr, though admitted that the current recession in the country is a global contagion, he said it would lead to decline in demand globally.

Speaking on how government policy could be of help to consumers while the recession lasted, he described the recent decision of the federal government to open the land borders as a proactive measure that can change the ugly tide.

“Recession typically occurs as a result of decline in production activities and results in increased unemployment; hence reduced wages and incomes. Of course this will naturally affect the amount of money available as disposable income to consumers, but things are a bit different now. “Perhaps because consumers are already readjusting to the ‘new normal’ forced on them by months of lockdown, when the country slumped into the new recession, it appears the consumption pattern hasn’t changed from what it was after the lockdown.

“Since consumers represent the bearers of consumers, recession or no recession, they are different from one to another and contend with different factors. But in this situation, things have gone beyond macro and micro levels, as the entire world struggles amidst threatening Coronavirus scourge.

“In Nigeria I’m optimistic, especially now that the borders have been opened; I hope we should be fine, pretty soon,” Oluwadare stated.

Meanwhile, in its recent report on consumer sentiment and behavior amidst the uncertainty of the COVID-19, McKinsey & Company, admitted that consumer sentiment varies greatly across countries impacted by COVID-19.

The report stated that consumers in China, India, and Indonesia consistently reported higher optimism than the rest of the world, while those in Europe and Japan remained less optimistic about their countries’ economic conditions after COVID-19.

According to agency report, Ghana’s economy contracted for a second straight quarter in the three months through September, even as government eased restrictions imposed to curb the spread of the coronavirus pandemic.