What is the real state of Nigeria's economy?

  

   In order to determine the current state of the economy, we first need to take a good look at the business cycle as a whole. Generally, the business cycle is made up of four different periods of activity extended over several years. These phases can differ substantially in duration, but are all closely intertwined in the overall economy.

•Peak - This is not the beginning of the business cycle, but this is where we'll start. At its peak, the economy is running at full steam. Employment is at or near maximum levels, gross domestic product (GDP) output is at its upper limit (implying that there is very little waste occurring) and income levels are increasing. In this period, prices tend to increase due to inflation; however, most businesses and investors are having an enjoyable and prosperous time.

      For Nigeria it was a period when we were making up to $50billion a day from oil. As at November 2014 the price of oil begun to fall on the world market and our income shrank to $32billion. So importation was still being sustained

 

     Recession - The old adage "what goes up must come down" applies perfectly here. This is the probably the most spoken word in Nigeria today. After experiencing a great deal of growth and success, income and employment begin to decline. As our wages and the prices of goods in the economy are inflexible to change, they will most likely remain near the same level as in the peak period unless the recession is prolonged. The result of these factors is negative growth in the economy. The recession in Nigeria it appears will drag on for some years but with recent measures at arresting it there is hope that it will not go into a depression. Oil sales at recent times stand at a meager $500million per month. Bombings in the Niger Delta have also been a contributory factor.  The North Eastern part of the country is worst hit with terror activities of Boko Haram reducing the accessibility of goods and services.

     Trough - Also sometimes referred to as a depression, depending upon the duration of the trough, this is the section of the business cycle when output and employment bottom out and remain in waiting for the next phase of the cycle to begin.

     Expansion/Recovery - In a recovery, the economy is growing once again and moving away from the bottoms experienced at the trough. Employment, production and income all undergo a period of growth and the overall economic climate is good.  There is hope that once the right plan is put into place, the economy will grow again before it goes into a depression. 

      Right now there is a  Liquidity squeeze- No loans, banks are struggling

How does a recession affect the ordinary man:

       •Goods staying on the shelves

•Layoffs and under employment

•Shrinking salaries

•Manufacturing slow down

•More people go into the informal sector

•Reduction in monies sent from abroad 

Forex Squeeze

Importation slows

Which businesses could survive?

•Food

•Entertainment

•Communication

•Petroleum Product marketing

•Real Estate 

Other necessities that people can not do with out would also survive as businesses.