Study on Effect of Recession in Nigeria

Added on -2019-09-23

| 66 pages
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Impact of recession has increased side hustle in NigeriaName of the student:Name of the University:Author note:
2CHAPTER ONE: INTRODUCTION1.1 Introduction:1.2 Research aims and objective:1.2.1 Research aims:1.2.2 Research objective:1.3 Research background:1.4 Research justification:1.5 Ethical consideration:1.6 Research limitation:1.7 Chapter summary:CHAPTER TWO: LITERATURE REVIEW2.1 Introduction:This is the study which will discuss about the effect of recession which has increased the sidehustle in Nigeria. Nigeria has experienced doldrums for a long period along with fiveconsecutive quarters when the economy is being shrinking. The economy as well as thebusiness cycle is being regarded as one of the precious interesting topics within the modernmacroeconomics theory. The economy of Nigeria is being gradually shifting from theeconomic recession towards the entire economic meltdown that is catastrophic, deadly aswell as heart-breaking in nature. Nigeria is being regarded as the hub of the economy ofWestern Africa which is stagnant. The declaration of the global financial crisis is beingfollowed. The financial crisis as well as the global economy is being regarded as a majorconcern of the economists, the political leaders and the financial institution managers over theworld. When the global financial crisis is being expressed, then it is expedient as this is beingregarded as the foundation and the spine of the developing economy. This is the place whereNigeria is being included. In the year 2016, in Nigeria, the things were turned austere specifically and gave birth to longimpregnated recession. This gave rise to the rate of unemployment considering the youths ofNigeria. As a flow, the goods prices and the services were increased continuously by over100%. There was the devaluation of the purchasing power. Failures were experienced withinseveral companies which were highly profiled. The production facilities of the multinationalcompanies have shifted their facilities out of Nigeria. This is the study where numerousmeasures are being suggested by the researchers that is being required to recover the
3economy of Nigeria. 2.2 Economic Recession in Nigeria:The word economic recession is comprised of two words that is the Economic and the otheris the Recession. As per the Merriam-Webster Dictionary, the term Economic specifies aboutthe management of production, the distribution as well as the goods consumption and theservice consumption. Recession is mentioned as the time of reduced economic activities.Earlier the economic activities are mentioned as the distribution, the production andconsumption. As per a study, the recession is being termed as a general downturn within aneconomy. This is the thing which is linked with high employment, maximum inflation andslowing of the gross domestic product. The economic recession is also being referred as the financial crisis as well as the economiccrisis and the financial crisis as well. This is the time when the economy is slowed. This ischaracterised with the devaluation of the financial institutions and the declining of theproductivity. This often takes place because of reckless and unsustainable money which isbeing lend. The economic recession is being known as the period of general decline of theeconomy and is accompanied typically through a drop within the stock market and theunemployment is increased and thus, a decline is observed within the housing market. As per some scholars, the cession is known as the period when there is a decline which isobserved significantly considering six months at a minimum. This specifies about a dropwithin the following economic indicators:Real Gross Domestic Product.The individuals’ income level and the government revenue generation. Manufacturing,Employment and Retail Sales. 2.3 Causes of Recession within Nigeria:There exist two chief reasons for the occurrence of the recession within Nigeria, which are:The economic recession which has taken place due to the financial crisis and theglobal economic. Economic recession which has taken place through the other factors of Nigeria.2.3.1 The economic recession in Nigeria due to the financial crisis:The present global crisis has been introduced as a financial crisis which is presently known asthe global economic crisis. This is the crisis which is unprecedented regarding the severity of
4the credit contraction. This is having the roots within the segment of banks while notconsidering the foreign exchange or the securities market. This is the crisis which is beingborn within US as there are certain laxities, which is there within US. This is then spreadtowards Europe and then over the entire developing countries and spread globally. Some ofthe countries which is not being affected by the financial crisis whereas, these countries thenbecame effected in the second round as this crisis has turned into economic issues now. An economic boom is being followed as the global financial crisis among the year 2003 andthe year 2007. This is the period, when the world economy is being expanding for an averageof 5% in a year. While, a combination of factors has precipitated the current crisis which hascombined the emergence of the subprime rates within the housing sector of USA, which isbeing deepening the crisis of the financial market, the crude prices of oil is risen and thesurges within the commodity prices where the series of the bankruptcy is triggered, forcedmergers, employment loss, firm concerns and closures within the corridors of the analysts ofeconomic policy within USA and the major capitalist economies. Within the financial crisiscourse, there is the dropping of the rate of the economic growth rate towards about 1%among the fourth quarter of 2007 and third quarter of the year 2008. The sub-prime crisis impact has been spread well over US, which has reasoned a widespreadsqueeze within liquidity as well credit. There is a hike within a price of the primarycommodities, the speculation has fuelled this partly, where the financial crisis is being shiftedtowards the commodity markets. The challenge is being added considering the intent of
5policy makers and avoiding the recession. The inflation is kept under control at the sametime. The negative effects of the financial crisis of the world has been revealed by the GlobalDevelopment Finance which has reasoned liquidity as well as the further assets has beenflown towards the developing countries within Nigeria for dropping by 41% in the year 2008.In the year 2007, from the peak of $ 1.2 million, the expansion of the finance has been movedtowards the developing countries which is being sharply dropped down in the year 2008 to $707 million. This is being revealed, from the projection about the dropping of the capitalflows further by $363 billion in the year 2009. The current financial crisis which has happened globally has taken place because ofnumerous factors which is comprised of numerous things like:The United States housing market is collapsed.The regulatory conditions of the tax financial. The implementation deficiency of the conditions of the strict corporate governancewithin US and within most of the developing economies. Many businesses are being crumbled due to the global financial crisis where the othercorporate giants which are formidable are being included over the world. Regarding theseunusual circumstances, the economic crisis of the country of Nigeria is being drawing theattention. Nigeria has been passing through the booming cycle of oil from the late 1970 tillthe commencement of this period. From the preceding decade, the economy of Nigeria iscaught within a prolonged stagnation which is obvious within the late period during the year2015. This is the thing which is being coupled along with the financial crisis which issystematic. This is the reason behind the tagging of the era of the researcher as the crisis era.This has been marked as memorable due to the dropping of the economic activity as well as,there is the weakening of the financial system.2.3.2 Economic recession which has taken place through the other factors of Nigeria:The oil boom is being regarded as the other reason of the economic recession within Nigeria.There was a massive increase of the revenue of oil after the Middle-East war at the ear 1973.This has structured unexpected, unprecedented and unplanned wealth considering the countryof Nigeria. This has given rise to a dramatic shift of the policy from an approach which isholistic, till the time they are benchmarked against the oil sector state. Moreover, when theenvironment of business is conducive considering the new investments, there is theinvestment of the newfound wealth of the government within the socio-economicinfrastructure over the country, specially within the urban countries. While, a growth is being
6observed within the service sector. Many of the Nigerians, those are able-bodied are beingshifted because of the relative attractiveness of the urban sector from the hinterland, wherethe farmlands are being abandoned considering the cities and has hoped for partaking theprosperous and the expanding urban economy. Social issues like the crimes, unemployment,pollution and congestion has been created by this. While, economically, Naira which isknown as the national currency of the country is being strengthened as the outflows is beingoutweighed and there happens the construction of the foreign reserves. Till the year 1985,Naira is being regarded as a stronger currency than that of the US dollar. The consumptionhabit which is import oriented has been encouraged by which the Nigeria is being turned intothe perennial net importer. This is being considered as a major problem with the decreasingof the oil earning along with the prices of the oil which is lower internationally. 2.4 General Consequences of the Economic Recession in Nigeria:The general consequences of the recession are like:Maximum Rates of interest: The liquidity limits as well as the availability of themoney amount that is available for making investment.The inflation which is being increased: A rise is being experienced within the goodprices as well as the services across a period. When there is an increment of inflation,a reduction is observed within the percentage of the services and the goods with thesimilar amount of money.The reduction of confidence of consumers: When it is being believed by theconsumer about the bad economy, then during the spending of money, they are to berequired for less likely. This is being regarded as psychological that possesses a realimpact over the economy. The real wage is reduced: The dropping of the real wages specifies about the paycheck of the workers, that is not being kept along the inflation. The worker isrequired to make the similar money amount along with a reduction within thepurchasing power. 2.5 Effect of the business development over the Economic Recession:The economy of the country is being affected by the business cycle that is the economic cycleof the country. The economic-wide fluctuations within the production, the trade as well as theactivities of the general economy is being referred within the business cycle within a systemof free market. The free market economy is being mentioned as the one, when there is nointervention of the government within the economic activities rather than the interaction of
7the demand and the supply towards the correct equilibrium within the market. The upwardsas well as the downward movements of the GDP that is the Gross Domestic Product are beingregarded within the business cycle and the period of contraction and the expansion is beingreferred within the level of the economic activities that is the business fluctuationsconsidering the trend of the long-term growth. These are the fluctuations, where the shift isbeing involved across the time within the periods of a relatively rapid growth of the economyas well as the period of the decline. The contemporary development of the country Nigeria is being sustained with extremedependence over one single primary commodity, which is oil. This is the thing which is beingaccounted for over 95% considering the export earnings. The crude oil is being contributingover two third revenue of the government and about 12% of the GDP. The Nigeria is beingextremely depended over the crude which is being rendered towards the instability of theforces of market along the grave implications towards the economic development as well asthe growth of the nation. Thus, for fostering the economic stability of the country, as well asfor becoming an entire partner within the global economy, of this century that us the 21stcentury, the country is required to be embarked over the export diversification and benefitsare being granted from the major stock of the natural resources. The diversification approachof Nigeria, the production and the export are required to be covered, combining themanufacturing, the agro-processing and services. The non-traditional agricultural goods arerequired to be extended along with the industrial products that are non-traditional.

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