Recession hits Africa's biggest economy

Nigeria is struggling to deal with falling oil prices and attacks from the "Niger Delta Avengers"

Recession hits Africa's biggest economy

Nigerian President, Muhammadu Buhari, arrives for his Inauguration at the eagle square in Abuja, Nigeria, Friday, May 29, 2015. Picture by: Sunday Alamba / AP/Press Association Images

Nigeria has officially entered into a recession, as new data shows the African nation's gross domestic product (GDP) shrunk by 2.06% in the second quarter of 2016.

The decline follows a 0.36% in the first quarter, according to figures from Nigeria's National Bureau of Statistics.

Africa's largest economy has not suffered from a recession in more than 20 years.

Low petroleum prices, foreign currency shortages and attacks by oil militants have contributed to creating the retrograde economy.

Nigeria is the continent's largest producer of oil, producing approximately 2.4 million barrels per day.

The fall in the price of oil from above $100 per barrel in 2014 to roughly $48 now has hit the West African country hard.

The industry has also had to deal with the self-styled "Niger Delta Avengers" causing disruptions in the oil-rich Niger Delta, including an attack on a Chevron offshore facility in May. During the oil boom, Nigeria boasted one of the fastest-growing economies in the world.

Manufacturing has also suffered.

Muhammadu Buhari, a former military ruler who was elected President of Nigeria last year, has faced criticism for his perceived "slow and faltering" response to the crisis in a country which, with nearly 180 million inhabitants, is Africa's most populous.

A recession had been predicted for some time, though economists had forecast second quarter shrinkage of closer to 1%.

The International Monetary Fund (IMF) foresees the economy declining 1.8% over the course of the year.

The Governor of the Central Bank of Nigeria, Godwin Emefiele, warned that "recession was imminent" in May, according to the Financial Times.

That same month, Capital Economics' Africa economist John Ashbourne told Business Insider:

"We have long warned of a slow-burning crisis in Nigeria. It now seems that this view was too optimistic: the country is headed into a full-blown economic crisis."

Kevin Daly, a senior investment manager at Aberdeen Asset Management, told FT today:

"It’s not a surprise to see Nigeria in recession. The country was always going to struggle when oil prices collapsed because it’s such a big part of the economy.

"But a lot of Nigeria’s current predicament could have been avoided. The country is so reliant on oil precisely because its leaders haven’t diversified the economy.

"More recently, they have tried, and failed, to prop up the naira which has had a ruinous effect on the country’s foreign exchange reserves and any reputation it might have had of being fiscally responsible."

If the economy is shown to have contracted for the year as a whole, it would mark Nigeria's first full-year recession since 1991.