Non-Oil Sector Boosts GDP Rise To 1.81% In Q3
Nigeria’s Gross Domestic Product (GDP) growth rate increased to 1.81% (year-on-year) in real terms in the third quarter of the year (Q3, 2018) compared to 1.50 per cent recorded in the preceding quarter, the National Bureau of Statistics (NBS) stated yesterday.
In nominal terms, aggregate GDP stood at N33.36 trillion while real GDP was estimated at N18.08 trillion, according to the Third Quarter GDP report, released by the statistical agency.
Growth in Q3 was largely helped by the non-oil sector, which contributed 90.62 per cent to total GDP while the oil sector contributed 9.38 per cent to growth in the review period.
Meanwhile, Oil GDP contracted by -2.91 per cent compared to -3.95 per cent in Q2 and 23.93 per cent in Q3 2017.
Average daily oil production fell to 1.94 million barrels per day (mbpd), higher than that of the 1.84mbpd recorded in Q2 by 0.10 mbpd- but lower than the 2.02 mbpd recorded in the same quarter of 2017 by -0.08mbpd.
Real growth of the oil sector was –2.91 per cent (year-on-year) in Q3, indicating a decrease of –25.94 percentage points relative to rate recorded in the corresponding quarter of 2017.
On the other hand, the non-oil sector grew by 2.32 per cent in real terms in Q3, representing 0.28 percentage points higher than the 2.05 per cent in preceding quarter and by 3.08 percentage points higher compared to the -0.76 per cent recorded same quarter of 2017.
According to the NBS, the non-oil sector was mainly driven by Information and communication sector while other drivers include agriculture, manufacturing, trade, transportation and storage and professional, scientific and technical services.
According to the sectoral contribution of GDP growth in the period under review, information and communication sector contributed 10.55 per cent to real GDP while agriculture 29.25 per cent to real GDP.
Manufacturing contributed 8.84 per cent to growth while services accounted for 48.79 per cent as well as industries which contributed 21.97 percent to real growth.
Also, trade contributed 15.80 per cent to real GDP while finance and insurance 2.52 per cent to growth as well as construction which recorded 3.01 per cent to GDP.
Reacting to the growth figures, Research Analyst at FXTM, Mr. Lukman Otunuga said the recovery in economic output could shape investor confidence in the economy going forward.
According to him: “Confidence over the recovery of Nigeria’s economy is set to become a dominant theme following reports of the nation’s economic growth accelerating during the third quarter of 2018.
“Nigeria’s GDP expanded by 1.81 per cent in the third quarter which represents an encouraging 0.31 per cent rise from the 1.50 per cent achieved in Q2. Although the primary driver behind the economic expansion was rising oil production and elevated oil prices, signs of non-oil sectors contributing to growth is a welcome development.
“With the non-oil sector growing by 2.32 per cent in real terms during Q3, Nigeria continues to showcase to the global arena that it remains on a quest to break away from oil reliance.”
He said: ”With economic growth expected to gain momentum next year on the back of increasing government spending ahead of the presidential elections, Nigeria’s outlook remains encouraging. OPEC’s deal to cut oil production by 1.2 million barrels a day is seen offering near-term support to oil – a scenario that will most likely support Nigeria’s government revenues and the Naira exchange.”
Also, Professor of Finance and Capital Market at the Nasarawa State University, Keffi, Prof. Uche Uwaleke, said the growth in GDP called for jubilation as it signaled a rebound to upward trajectory.
According to him: ”The Q3 2018 GDP report which showed the economy grew by 1.8 per cent compared to 1.5 per cent in Q2 is cheering news because it marked an end to the downward trend in GDP growth noticed since the first quarter of this year.
“Of note is the performance of the non oil sector where marginal improvements were recorded in manufacturing, especially cement production, Transportation and agriculture. This outcome may have been helped by the implementation of the 2018 budget which kicked-in at the beginning of the third quarter, the relative stability in the exchange rate as well as the CBN’s interventions in the real sector. Be that as it may, the growth is still weak and fragile particularly with respect to the sectors that have strong linkages to jobs.
He said, “The performance of the financial services sector which is critical to the economy is disappointing. Going forward, there is the need to vigorously implement the capital component of the 2018 budget, invest more in education and health sectors which are lagging behind, tackle the incessant farmers-herdsmen clashes weighing down on food production and enhance access to credit by target beneficiaries of the various CBN intervention schemes.
“Overall, improvement in the ease of doing business will go a long way in increasing the risk appetite of financial institutions in Nigeria which will positively rub off on GDP growth.”
On the contrary, another renowned analyst, who pleaded anonymity because of his dealings with the present government said that the latest growth figures were nothing to celebrate.
According to him, ”GDP in the third quarter of 2018 to 1.81 per cent from 1.51 per cent in Q2 2018 is still nothing to cheer about. It still remain slow, epileptic growth since our exit from recession in 2017.
“The growth remains not all inclusive and susceptible to external shocks beyond our control like movements in oil prices, as though oil sector constitute only about ten percent of our GDP, it contribute at least ninety percent of our foreign exchange earnings.”
He said, “Growth in GDP remains less than average population growth of three percent , thereby remaining negative growth as same can not in itself translate to job growth. Given unemployment rate of 18.8 per cent and youths unemployment/underemployment of 52.65 percent as per latest NBS data of September 2017, it’s clear that GDP growth since we slumped into recession in 2016 has not translated into improved living condition for average Nigerians.
“Government need to deal with two fundamental problems of the economy in foreign exchange management and oil subsidy to enable opening the economy for improved, faster growth that will support improved employment generation.
“Government needs to stop oil subsidy and encourage more private sector driven modular refineries. This will save the huge foreign exchange spent on fuel importation as well as subsidy thereby channeling same into improved infrastructure and investment in agriculture and manufacturing and enhanced job growth.
This will allow the economy build on realistic, sustainable growth.”