Why GDP Growth Rate Drops Every Election Year In Nigeria
Nairametrics| The Federal Government released its 2017 National Economic Recovery Growth Plan (a Medium-Term Plan for 2017 – 2020), which was developed for restoring economic growth to the Nigerian Economy.
The ERGP is a 145-page document filled with policy principles, objectives, actions and expectations. One of the most notable expectations in the plan are Nigeria’s growth rate between now and 2020. However, one aspect of their projections caught our attention.
Look at the GDP projections on this table with focus on 2019.
The government explained why they projected a drop;
The slight dip in growth in 2019 is projected to result from the general election in that year with a quick recovery the following year. The strong growth during the Plan period will be driven by agriculture and industry, and in the later parts of the Plan period by the services sector as well.
Except for 2019, the government projects a steady growth rate all through the to 2020. The year, 2019 happens to be an election year and so we wondered if this was a familiar pattern. Here is what we found out. (Wait for the chart to load).
A look at the chart shows the years preceding an election year, the election year and the year after election. Election years have been 1983, 1999, 2003, 2007, 2011 and 2016 respectively. As the chart depicts, every election year has experienced a lower GDP growth rate compared to its preceding and subsequent year. The only year that bucked that trend was in 2007.
This increased my curiosity even more; why then does GDP growth rate drop every election year in Nigeria? One typical answer might be to look at inflation rates, considering that it is used to calculate real GDP growth rate. However, we did not observe any pattern here. Indeed, inflation rates threaded lower in some election years compared to others (considering the preceding years and year after election). A hypothetical reason could be that economic activities typically ground on election years, possibly due to uncertainty as most business become circumspect and cut down spending. Another could be that a new government tends to start slowly after being sworn in. However, you might want to argue that the only election year 2007, where we recorded a growth came with a transfer of power from one government to another. Also to add that Goodluck Jonathan was elected in 2011 after, serving two years as President.
Do you know why Nigeria records a slower GDP growth rate on election years? Send us an email