Nigeria records a slower GDP growth rate of 1.9% in the first quarter of 2020
According to the National Bureau of Statistics (NBS), the Nigerian economy expanded by 1.9% year-on-year in Q1’2020 compared with a growth of 2.1% in the corresponding period of 2019 (Q1’2019). The current year-on-year growth rate also represented a slow pace of expansion relative to Q4’2019 (2.6%). On a quarter on quarter basis, economic growth slipped into negative territory at -14.3% in Q1’2020 from positive growth of 5.6% in Q4’2019. This represented the highest quarter-on-quarter contraction since the last recession in 2016. The slow pace of growth could be largely attributed to the effects of COVID-19, which has resulted in the persistent decline in global crude oil prices coupled with weak demand for Nigeria’s crude on the global market. In addition, the unprecedented disruptions to global supply chains have crippled regular supplies of imported inputs for use in the country’s manufacturing sector. In nominal terms, the size of the economy in the first quarter of 2020 was N35.6 trillion (US$100 billion).
Growth slowed in oil and non-oil sectors in Q1’2020 (year-on-year)
The non-oil sector which accounted for 91% of the overall real GDP in Q1’2020 posted a growth decline from 2.3% (year-on-year) in Q4’2019 to 1.5% in Q1’2020. The slow growth of the non-oil sector reflected the poor performances of agricultural, manufacturing and services sectors. On the other hand, the oil sector grew by 5.1% in Q1’2020, a significant improvement from the negative growth of 1.5% in Q1’2019. This was partly due to an increase in average domestic crude oil production to 2.1 million barrels per day (mbpd) in Q1’2020 from 2 mbpd in Q1’2019. When compared with the oil sector, the non-oil sector was the most hard-hit by the effects of coronavirus pandemic on global value chains.
The Abysmal Performance of Agriculture sector was largely driven by slowdown in Crop Production
The growth of the agricultural sector in Q1’2020 stood at 2.2%, slower than its level in the corresponding period of 2019 (3.2%). It also represented a 100-basis point decline when compared with the sector’s year-on-year in Q4’2019 (2.3%). When compared with the previous quarter, the sector contracted further by -27.8% in Q1’2020. This performance was accentuated by contractions in crop production (-30%), forestry (-15.2%) and livestock (-12.8%). Fishing, on the other hand, recorded a quarter-on-quarter growth of 13.4% in Q1’2020.
The sudden outbreak of COVID-19 tests the resilience of the Industrial Sector
The industrial sector grew faster by 2.3% in Q1’2020 compared with its level in the corresponding period of 2019 (0.4%). Growth of the sector was driven by the oil sector, which expanded by 5.1% in the quarter following improved oil production. Other sectors such as manufacturing and construction recorded slower growth in the quarter at 0.4% and 1.7% respectively. The slowdown of the manufacturing sector growth could be attributed to a sharp production decline in the oil refining sub-sector. This indicates deteriorating condition of the local refineries which have overtime performed below full capacity.
Services sector growth was largely impacted negatively by COVID-19
The services sector grew by 1.6% (year-on-year) in Q1’2020 relative to its level in the corresponding period of 2019 (2.4%). Similarly, the year-on-year growth was slower when compared with its level in Q4’2019 (2.6%). The deceleration of the sector’s growth was largely due to contractions in major sub-sectors including trade (-2.82%), real estate (-4.75%), accommodation & food services (-3%) and public administration (-8.72%). This was a direct fall-out from the implementation of social distancing policies to contain the spread of the COVID-19 across the country. Out of the 14 activities in the services sector that expanded in 2020, 11 sub-sectors recorded a slow pace of growth while 3 sub-sectors grew at a faster rate. However, activities contracted in the remaining 8 sub-sectors in 2020.
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