Nigeria exits recession amidst weak economic recovery

Nigeria exits recession amidst weak economic recovery

• As real GDP Grew by 0.11% in Q4
• Slid -1.92% in Full Year 2020

Trudging along a challenging terrain created by the novel Coronavirus pandemic, the Nigerian economic has managed to pull out of recession after three quarters of shrinking in value.

Specifically, the Gross Domestic Product (GDP) of the country grew by 0.11 per cent year-on-year in real terms in the fourth quarter of 2020, representing the first positive quarterly growth in the last three quarters.

Though weak, the positive growth reflects the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters.

As a result, while the Q4 2020 growth rate was lower than growth rate recorded the previous year by -2.44 per cent points, it was higher by 3.74 per cent points compared to Q3 2020, the National Bureau of Statistics reveals in the latest Nigerian Gross Domestics Report for Q4 and Full Year, 2020.

The report read, “On a quarter on quarter basis, real GDP growth was 9.68 per cent indicating a second positive consecutive quarter on quarter real growth rate in 2020 after two negative quarters.

“Overall, in 2020, the annual growth of real GDP was estimated at -1.92 per cent, a decline of -4.20 per cent points when compared to the 2.27 per cent recorded in 2019.”

In the quarter under review, the report shows that aggregate GDP stood at   N43,564,006.29 million in nominal terms.

This performance is higher when compared to the fourth quarter of 2019 which recorded a GDP aggregate of N39,577,340.04 million, representing a year on year nominal growth rate of 10.07 per cent.

According to the latest data, the growth rate was lower relative to growth recorded in the fourth quarter of 2019 by -2.2 per cent points but higher than the preceding quarter by 6.68 per cent points with growth rates recorded at 12.34 per cent and 3.39 per cent respectively.

For better clarity, the Nigerian economy has been classified broadly into the oil and non-oil sectors. (Figure 1):

The Oil Sector

In the fourth quarter of 2020,  an average daily oil production of 1.56 million barrels per day (mbpd) was recorded. This was lower than the daily average production of 2.00mbpd recorded in the same quarter of 2019 by -0.44mbpd and the third quarter of 2020 by -0.11mbpd. (Figure2).

Real growth of the oil sector was -19.76%  (year-on-year) in Q4 2020 indicating a decrease by -26.12% points relative to the rate recorded in the corresponding quarter of 2019. Growth decreased by -5.87% points when compared to Q3 2020. Quarter-on-quarter, the oil sector recorded a growth rate of -26.27% in Q4 2020.  For 2020, the oil sector grew at -8.89% compared to 4.59% in 2019. The oil sector contributed 5.87% to total real GDP in Q4 2020, down from the corresponding period of 2019 and the preceding quarter, where it contributed 7.32% and 8.73% respectively.

The Non-Oil Sector

The non-oil sector grew by 1.69% in real terms in Q4 2020, slower than the 2.26% recorded in the corresponding quarter of 2019, but better than the -2.51% growth rate recorded in the preceding quarter. For the full  year of 2020 however, the non-oil sector grew -1.25% compared to 2.06% in 2019. Growth in the sector was driven by Information and Communication (Telecommunications & Broadcasting). Other drivers were Agriculture (Crop Production), Real Estate, Manufacturing (Food, Beverage & Tobacco), Mining and Quarrying (Quarrying and other Minerals), and Construction, accounting for positive GDP. In real terms, the Non-Oil sector contributed 94.13% to the nation’s GDP in the fourth quarter of 2020, higher than the share recorded in the fourth quarter of 2019 (92.68%)  and the third quarter of 2020 (91.27%).  For 2020, the Non-Oil sector contributed 91.84% to real GDP, higher than 91.22% recorded in 2019.