THE NIGERIAN ECONOMY: NESG GDP ALERT JANUARY 2019

The Nigerian economy expanded in the fourth quarter as the real gross domestic product (GDP) grew by 2.4%. This represents an improvement when compared with 2.1% growth recorded in the fourth quarter of 2017 and 1.8% in the third quarter of 2018. For the full year of 2018, GDP (economic output) grew by 1.9%, performing better than 2017, where growth was 0.8%. In nominal terms, the value of goods and services produced in the economy in 2018 was N129 billion (2017: N114.9 billion). As in previous years, the non-oil sector accounted for 91% of total GDP in 2018.

For the full year 2018, several sectors were crucial in influencing the performance of overall GDP growth, particularly based on their performance and contribution (weight) to overall GDP. The key sectors that contributed significantly to GDP growth in 2018 were: Information & Communication, which accounted for 56.9% of total GDP growth; Agriculture (27.6%); Manufacturing (10%) and Transport & Storage (8.9%). Some sectors that weighed growth in 2018 include Real Estate (by -16.9%), Trade (-5.5%) and Public Administration (-2.4%).

In 2018, the non-oil sector grew by 2%, the highest growth rate recorded since the economic recession in 2016. Growth in the oil sector was 1.1%, significantly short of the 4.7% recorded in 2017. Performance of major sub-sectors is highlighted below:

  • Agriculture: The sector expanded by 2.1% in 2018. This is the sector’s lowest growth rate in over two decades. Growth in Agriculture was led by Crop Production, which accounted for 88% of Agricultural output in 2018. In terms of contribution, Agriculture accounted for 25% of real output in the year.
  • Manufacturing: With a growth rate of 2.1% in 2018, manufacturing recorded positive growth in the four quarters of the year, making it one of the best performing sectors. However, growth within the sector is largely concentrated on three sub-sectors, which are Cement; Food, Beverage & Tobacco; and Textile, Apparel, and Footwear. These three sectors accounted for 77% of total manufacturing output in 2018. The remaining 23% is shared among 10 other subsectors, raising the need for diversification within the sector. Manufacturing sector contributed 9.2% to GDP in the year.
  • Mining & Quarrying (M&Q): This sector grew marginally by 1.3% in 2018 and recorded three consecutive negative growth rates of -3.8%, -2.8% and -1.2% in the second, third and fourth quarters of the year, respectively. The sector’s growth of 14.9% in the first quarter was able to shore up its overall growth to the positive region in the year. Crude Petroleum and Natural Gas accounted for 98% of total M&Q output.
  • Information and Communication (I&C): The sector recovered significantly from its negative growth of 1% in 2017 to become the second fastest growing sector with a growth rate of 9.7% in 2018. I&C is also the sector with the highest contribution to GDP growth in
    2018 (See Figure 2). Two of the sub-sectors- Telecommunications & Information Services and Broadcasting- were largely responsible for I&C’s growth and they account for 77% and 14% of I&C’s output, respectively.
  • Trade: Output of this sector declined by 0.6% in 2018. Because of the sector’s significant contribution to overall GDP, which was 16.4% in 2018, its decline weighed on overall GDP growth in the year. On an annual basis, the sector is yet to return to positive growth
    since achieving 5.1% in 2015.
  • Education and Health: In terms of economic output, both sectors continued their negative performance, declining by -0.03% (Education) and -0.3% (Health) in 2018. Collectively, they accounted for 2.8% of GDP in 2018.
  • Real Estate: Real Estate is the worst performing sector, with negative growth of 4.7% in 2018 (2017: -4.3%). The sector is yet to recover since the economic recession in 2016. It accounts for 6.4% of GDP

If you are interested in reading the most recent Macro-Economic Outlook Report for 2019, Please visit www.nesgroup.org/macroeconomicoutlook/ for more materials.

Click the link below to Download the full report:

NESG-2019-GDP-Alert-1.pdf (135 downloads)

Leave Comment

Your email address will not be published. Required fields are marked *