THE Bank of America Chief Economist, Michelle Meyer has said in a note that America has officially fallen into recession, joining the rest of the world and it is a deep plunge in which jobs will be lost, wealth will be destroyed and confidence depressed.
The United States (US) is the largest foreign investor in Nigeria, with a foreign direct investment in stock of $5.6 billion in 2018 concentrated largely in the petroleum, mining and wholesale trade sectors.
According to Meyer, the U.S economy is expected to “collapse” in the second quarter, shrinking by 12 per cent and Gross Domestic Product (GDP) for the full year will contract by 0.8 per cent.
Bilateral relations fact sheet showed that at $2.2 billion in 2017, Nigeria is the second-largest U.S. export destination in Sub-Saharan Africa.
The two-way trade in goods between the US and Nigeria totalled over $9 billion.
The fact sheet also showed that Nigeria is eligible for preferential trade benefits with the U.S under the African Growth and Opportunity Act (AGOA).
Nigerian exports to the US included crude oil, cocoa, cashew nuts, rubber, antiques, food waste and animal feed, while U.S. exports to Nigeria include wheat, vehicles, machinery, kerosene, lubricating oils, jet fuel, civilian aircraft, and plastics.
The U.S news reported businesses under shutdown orders to range from coal mines to building contractors to many types of manufacturers, plus professional offices including law firms and accounting offices.
Retailers ordered to close include car dealers, clothing stores, furniture stores, florists, office supply stores and lawn and garden stores.
How this will affect Nigeria’s economy
Financial economist, Daniel Marcus who spoke with The ICIR said: “If the U.S economy halts, Africa at large would also feel the heat strongly because the U.S is a major supporter of businesses in most African nations in terms of exports.”
“Expected revenue from businesses with the U.S is most likely to drop to the barest minimum”, Marcus added.
Research Analyst, Seyi Kolawole of NASD PLC who spoke with The ICIR said: ” A sluggish American economy also means a deficit in the trade balance between Nigeria and the US”.
According to Chetan Ahya, Chief Economist at Morgan Stanley, “the disruptions and dislocations in the economy and markets will trigger a year over year contraction in global growth in the first half of 2020.”
Ahya believes the U.S. government is undertaking a “strong monetary and fiscal policy response” that “will help revive global growth” in the third quarter of this year.