Research Document: 2021 Q1 Economic Report

Posted Thu, Jun 10, 2021 9:56 AM

Real Sector DevelopmentsNigerian economy consolidates recovery, grew further by 0.5% in 2021 Q1

According to the National Bureau of Statistics (NBS), the Nigerian economy expanded by 0.5% in the first quarter of 2021. This performance represents the second consecutive expansion following the country’s recovery from recession in 2020Q4. It is, however, a slower growth when compared with the real gross domestic product (GDP) growth recorded in 2020Q1 (1.9%). Despite the positive growth trajectory, the current level of economic growth is relatively weak and aligns with the trend observed following the exit of the economy from the previous recession in 2017Q2. In nominal terms, the size of the Nigerian economy in 2021Q1 stood at N40 trillion (US$105.5 billion)1. The gradual improvement in economic activities was largely driven by the non-oil sector, which accounted for 91% of total real GDP. The non-oil sector grew by 0.8% in 2021Q1, representing a slow pace of expansion relative to its performances in 2020Q1 and 2021Q4. The key contributors to the non-oil sector growth in the quarter were the agricultural and industrial sectors, with a combined share of 46% in total real GDP. Similarly, the agricultural and industrial sectors, respectively, contributed 98% and 44% to the overall real GDP growth between 2021Q1 and 2020Q1. However, the oil sector – which accounted for 9% of real GDP - remained in contraction territory at –2.2% in 2021Q1. This poor performance could be attributed to a sharp fall in crude oil production to 1.7 million barrels per day in 2021Q1 from 2 million barrels per day in 2020Q1; thus, reflecting mainly improved compliance of Nigeria with its OPEC’s output quota.