Nigeria’s Gross Domestic Product (GDP) grew by 1.87% (year-on-year) in real terms in Q1 2020. This is according to the first quarter (Q1) GDP report, released by the National Bureau of Statistics (NBS) on Monday.
According to numbers contained in the Bureau’s report, the performance recorded in Q1 2020 represents a drop of 0.23% points compared to Q1 2019 (2.10%) and 0.68% points decline compared to Q4 2019 (2.55%), reflecting the earliest effects of disruption caused by Covid-19 pandemic and crash in oil price.
According to the report, Nigeria’s oil sector recorded a real growth rate of 5.06% (year-on-year) in Q1 2020, indicating an increase of 6.51% points relative to the rate recorded in the corresponding quarter of 2019 (-1.46%).
However, when compared to Q4 2019 which recorded a growth rate of 6.36%, oil sector growth decreased by –1.30% points. The contribution of the Oil sector to aggregate GDP stood at 9.50% in Q1 2020, up from figure recorded in the corresponding period of 2019 (9.22%) and the preceding quarter (7.32%), as the share of the non-oil economy declined.
During the first quarter of 2020, an average daily oil production of 2.07 million barrels per day (mbpd) was recorded. The production level was higher than the 1.99mbpd recorded in the same quarter of 2019.
The non-oil sector grew by 1.55% in real terms during the reference quarter (Q1 2020), this was slower by -0.93% points compared to the rate recorded during the same quarter of 2019 (2.47%), and –0.72% points slower than the fourth quarter of 2019 (2.26%).
According to the Bureau’s report, growth in non-oil sector was driven mainly by Information and Communication (Telecommunications), Financial and Insurance (Financial Institutions), Agriculture (Crop Production), Mining and Quarrying (Crude Petroleum & Natural Gas), and Construction.
In real terms, the Non-Oil sector contributed 90.50% to the nation’s GDP in the first quarter of 2020, less than its share in the first quarter of 2019 which was 90.78% and the fourth quarter of 2019 recorded as 92.68%. Activities that witnessed weaker performance relative to Q1 2019 include Quarrying, Road transport, Accommodation and Food services as well as real estate.
Service, Industry sectors remain resilient as economy posts slowest growth in 6-quarter
Nigeria’s service sector showed strong resilient in the period under review as it contributed 54.39% to the aggregate GDP, up from 53.64% recorded in Q4 2019. Also, the industrial sector recorded a marginal increase in its contribution to GDP at 23.65%, up from 22.25% in Q4 2019. Meanwhile, the contribution from agriculture sector contracted to 21.96% from 25.16% in the previous quarter. Contraction in the agric. Sector maybe largely traceable to the planting season.
A closer look at the GDP report shows that 1.87% growth recorded in Q1 2020 represents the slowest in the last 6 quarters (2018 Q4 – 2020 Q1). In Q4 2018, GDP growth rose to 2.38% as the economy continued its slow recovery from the 2016 recession.
The slow growth momentum had been sustained through the subsequent quarters until the latest contraction which is attributable to disruption caused by the Covid-19 pandemic and oil price.
The Bottom Line
GDP is Nigeria’s biggest economic data and it measures the monetary value of everything produced in the country. It depicts the nation’s total economic activity. A decline in GDP means major economic activities are slow or sluggish, which may be a result of several factors.
- It is important to note that while the Nigerian economy contracted slightly in Q1, growth in Q2 is expected to dip largely in Q2 due to lockdown across major economies of the world which disrupted both supply and demand chain.
- The Oil sector, Travel and Tourism, Hospitality and Manufacturing are among sectors expected to contract largely in subsequent through 2020
- According to IMF, the Nigerian economy is expected to contract by -3.4% in the year, as Covid-19 pandemic and oil price shock exacerbate the vulnerability of Nigeria fiscal and monetary landscape.