Nigeria exits recession with 0.11% GDP growth

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The National Bureau of Statistics (NBS) announced yesterday that Nigeria exited recession in the fourth quarter of 2020, recording its first growth in three quarters as coronavirus-linked lockdown was lifted across the country,

According to the bureau, gross domestic product grew 0.11 per cent in the three months between October and December from a year earlier.

The economy slipped into recession in the third quarter of 2020 with a decline of 3.6 per cent, having contracted 6.1 per cent in the second quarter, leading to Nigeria’s second recession in five years.

For the full year 2020, the economy contracted 1.92 per cent, better than the International Monetary Fund projection.

The NBS said Thursday that although the growth was weak, it 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% points, it was higher by 3.74% points compared to Q3 2020,” the NBS said.

On a quarter on quarter basis, real GDP growth was 9.68% indicating a second positive consecutive quarter on quarter real growth rate in 2020 after two negative quarters.

However, overall in 2020, the annual growth of real GDP was estimated at –1.92%, a decline of –4.20% points when compared to the 2.27% recorded in 2019.

According to the report, the growth was largely driven by positive growth recorded in the information and communication sector (15.9%) and agriculture (3.42%).

Highlights

The oil sector plunged by 19.76% (year-on-year) in real terms as against a contraction of 13.89% recorded in Q3 2020.

The non-oil sector on the other hand grew by 1.69% in real terms, an improvement compared to the contraction of 2.51% recorded in Q3 2020. It however was slower than 2.26% recorded in the corresponding period of 2019.

The service sector contributed 54.28% to the GDP in Q4 2020, followed by agriculture, which contributed 26.95%, and industries with 18.77%.

Non-oil accounted for 94.13% while the oil sector accounted for 5.87% of the total GDP for Q4 2020.

Oil sector

The oil sector contracted by 19.76% (year-on-year) in Q4 2020, a downturn compared to a similar contraction of 13.89% recorded in the previous quarter (Q3 2020).

It also represents a decline of 26.12% points when compared to a positive growth of 6.36% recorded in the corresponding period of 2019.

The sector’s contribution to Nigeria’s GDP also reduced to 5.87% in Q4 2020 from 8.73% recorded in Q3 2020 and 7.32% in Q4 2019.

In Q4 2020, average daily oil production of 1.56 million barrels per day (mbpd) was recorded, representing a 6.59% and 22% declines when compared to 1.67mbpd and 2mbpd recorded in Q3 2020 and Q4 2019 respectively.

The decline in the oil sector activity can be attributed to the crash in global crude oil prices, which was triggered by the oil price war between Saudi Arabia and Russia.

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% negative growth rate recorded in the preceding quarter.

Growth in the sector was largely 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.

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%).

Key sectors’ performance

The agricultural sector, in the fourth quarter of 2020, grew by 3.42% (year-on-year) in real terms, an increase by 1.11% points from the corresponding period of 2019, and an increase of 2.03% points from the preceding quarter which recorded a growth rate of 1.39%.

The sector also contributed 26.95% to the overall GDP in real terms in Q4 2020, higher than the contribution in Q4 2019 but lower than Q3 2020 which stood at 26.09% and 30.77% respectively.

Real GDP growth in the manufacturing sector in the quarter under review stood at –1.51% (year on year), lower than the corresponding period of 2019 and the preceding quarter by 2.75% points and 0.01% points respectively.

The real contribution to GDP in Q4 2020 was 8.60%, lower than the 8.74% recorded in the fourth quarter of 2019 and 8.93% recorded in Q3 2020.

In real terms, the Trade sector contracted by 3.2% (year-on-year) in the fourth quarter of 2020, which was 2.62% points lower than the rate recorded in Q4 2019, and 8.92% points higher than in the preceding quarter.

Trade’s contribution to GDP was 15.46%, which is lower than the 15.99% it represented in the corresponding period of 2019, but higher than the 13.88% recorded in the previous quarter.

Information and communication recorded a growth rate of 14.95% in real terms, an increase of 6.45% points over the corresponding period of 2019.

The sector contributed 15.06% to aggregate real GDP in Q4 2020, higher than the same quarter of the previous year in which it represented 13.12% and higher than the preceding quarter, in which it represented 13.47%.

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