At 1.94%, Nigeria’s Economy Records Slower GDP Growth In 2019Q2

Just three years after entering into a technical recession in August 2016 barely a year after President Muhammadu Buhari came into office, and two years after exiting, Nigeria’s economy slipped back into murky waters, according to data by the National Bureau of Statistics (NBS).
The country’s Gross Domestic Product (GDP) released Tuesday morning confirmed what analysts had feared for over several months, growing by a slower 1.94% year-on-year real-terms growth in the second quarter of 2019. Although this represented an increase of 0.44% over the 1.5% growth recorded in 2018Q2, the 2019Q2 GDP figure represented a bigger 0.16% decline from the 2.10% reported in the preceding quarter (2019Q1), which was revised from 2.01% due to oil output revisions.
Recall that the 2018Q4 real growth rate stood at 2.38%, the peak so far since 2017Q2, which means that the nation’s economy has suffered a second back-to-back quarterly decline and therefore entered into a technical recession like South Africa which slipped therein, in 2018.
A technical recession (the milder form of depression), occurs when there is a contraction in the GDP for six months (two consecutive quarters) or longer. It is usually marked by high unemployment, stagnant wages, fall in retail sales and generally does not last longer than one year.
In the 2019 second quarter, according to data by the NBS, aggregate GDP stood at N34.944tr in nominal terms, up by 13.83% over the performance in the second quarter of 2018, and 9.8% over the preceding quarter. Real GDP stood at N16.9tr
This, the report noted, “follows an equally strong first-quarter performance, and was likely aided by stability in oil output as well as the successful political transition. Overall, a total of 15 activities grew faster in Q2 2019 relative to last year, while 13 activities had higher growth rates relative to the preceding quarter.
“On a half-year basis, real growth in the first half of 2019 stood at 2.02%, higher than in 2018 which was 1.69%,” the report continued, adding that quarter-on-quarter, real GDP increased by 2.85% compared to a decline of –13.69% in the preceding period.
In the period under review, Nigeria’s oil sector, which accounts for 8.82% to total real GDP, recorded 1.98m barrels per day (mbpd) average daily oil production, representing 7.6% rise over the daily average production of 1.84mbpd recorded in the same quarter of 2018, but slightly less than the 1.99mbpd in Q1 2019. The peak of Nigeria’s production output in recent times was the 2.05mbpd recorded in 2016Q1.
The non-oil sector, which computes 91.18% to total GDP output, grew by 1.64% in real terms in the period, down by 0.40% points from the level in the same quarter of 2018, and -0.83% point lower than the first quarter of 2019.
During the quarter, the services sector was the major driver, contributing 53.96%; followed by industries and agriculture with 23.21% and 22.82% respectively.
The Information and Communication sector, comprising telecommunications and information services; publishing; motion picture, sound recording and music production; and broadcasting recorded a robust 40.54% year-on-year in nominal terms, a 27.37% points up from the rate recorded in the same quarter of 2018, and 29.10% points higher than rate recorded in the preceding quarter. On a QoQ basis, the growth rate was 43.41%, even as the sector contributed 13.85% to total Nominal GDP in the 2019Q2, higher than 11.22% in the same quarter of 2018 and higher than the 10.60% it contributed in the preceding quarter.
The mining and quarrying sector, comprising crude petroleum and natural gas, coal mining, metal ore and quarrying, and other minerals sub-activities grew by –18.35% (year on year) in the review period. Quarrying and other minerals exhibiting the highest growth rate at 67.65%, followed by coal production at 28.76%, while crude petroleum and natural gas remained the most dominant activity in the sector or 97.22%, with the mining and quarrying sector contributing 8.84%.
The agricultural sector, which comprising sub-activities- crop production, livestock, forestry, and fishing, recorded 17.76% YoY growth in nominal terms, representing an increase of 7.12% points from the same quarter of 2018, but a decline of –4.81% points compared to the preceding quarter.
Agriculture contributed 19.43% to nominal GDP in Q2 2019, higher than the rates recorded for the second quarter of 2018 and the first quarter of 2019, at 18.78% and 19.10% respectively. However, crop production was still the major driver, accounting for 88.56% of overall nominal growth, even as QoQ growth stood at 11.71%.
In real terms, the Agric sector accounted for 22.82% of total GDP in real terms, which was lower than that of 2018Q2 but higher than the first quarter of 2019 which stood at 22.8% and 21.89% respectively.
In the period under review, the manufacturing sector recorded 37.79% YoY growth, up by 18.27% from the 19.52% of the preceding Q2, and 1.34% points higher than the preceding quarter figure of 36.45%.
The transportation and storage sector grew by 25.56% in nominal terms, a drop when compared to 38.56% recorded for the corresponding quarter of 2018 and 50.39% in the preceding quarter. The fastest-growing activities in this quarter were post and courier services at 39.53% and road transport, 27.10%; just as the construction sector grew by 42.80% in nominal terms (year on year), a decline by –1.28% points, compared to the 44.09% recorded in the same quarter of 2018, and by –24.18% points from that of the preceding quarter.