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Finance experts say
overall economic activity appears to have lost the momentum of its
rebound during the second quarter of this year, thus bringing concerns
that a second round of financial crisis is beginning to spread across
global economies.

“The current budget
deficits and planned cuts in spending in most developed countries may
pose further challenges to sustainable global economic recovery,” said
a report on the review of the Nigerian economy by Access Bank
yesterday.

“Recent economic
data from developed economies indicate a disturbing situation, with
unemployment rates remaining high, amid further weakening in
manufacturing activities and consumer sentiment. The threat to global
economic recovery appears to be broadly entrenched and real,” the
report added.

It said that
improvement in oil GDP is a key feature that would support the nation’s
overall economic expansion in the face of these uncertainties while
sustained growth in non-oil sector, especially agriculture, wholesale,
retail trade and services, remained the major driver of growth.

“The drop in crude
oil price was a major concern for Nigeria, with President Jonathan
urging a downward review of some key assumptions of the 2010 budget.
Factors to support crude oil price include the weakening of the US
Dollar against major currencies, increased flow of speculative money,
supply bottlenecks resulting from political instability in oil
producing countries, elevated demand from China, as well as
stabilisation in major economies.”

A flicker of hope

Similarly,
Financial Derivatives Company, a finance firm which offers treasury and
financial services, said the economic mood has since soured and double
dip is the phrase on everyone’s lips. The report said that economists
were still optimistic, adding that a poll by the Wall Street Journal
showed that economists are more optimistic than the general public.

“History shows that
whenever economists are more optimistic than the public, the good times
are around the corner. Economists views lead and public views lag
prosperity” the report stated adding that Nigeria has to spend its way
out of the slowdown.

“Aggregate spending
in budget 2010 could exceed N5 trillion. With the states, we expect N10
trillion. Absorptive capacity weakness could lead to fiscal spills and
leakages. The Senate has also approved N445 billion extra spending and
there is an expansionary budget supported by accommodative monetary
policy. All these are expected to catalyse growth,” it added.

Finance experts say the nation’s rising fiscal deficit, increase in
domestic borrowing, shrinking of credit to the private sector,
depleting foreign reserves, and an uncertain foreign exchange market,
cautious approach to the stock market by brokers and unyielding
investors to recapitalise banks are fall outs of the financial crisis.