Global Courant 2023-05-30 18:53:35
So far this year, Nigeria’s economy has faced a myriad of challenges, ranging from tightness at the start of the year to persistently high interest rates and skyrocketing inflation. These obstacles have had a significant impact on the country’s economic performance, including GDP.
This is according to the latest report of the National Bureau of StatisticsNigeria’s gross domestic product (GDP) has grown by 2.31% (year-on-year) in real terms in the first quarter of 2023. quarter of 2022. The report suggests that the decline in growth is attributed to the adverse effects of the money crisis experienced in the first quarter of 2023.
GDP performance in the first quarter of 2023 was mainly driven by the services sector, which recorded a growth of 4.35% and contributed 57.29% to total GDP. The agricultural sector grew by -0.90%, lower than the 3.16% growth recorded in the first quarter of 2022. Activities that contributed the most to real GDP in the first quarter of 2023 included crop production, trade, telecommunications and information services, crude oil and natural gas, and real estate, among others.
The GDP data for the first quarter revealed a number of important insights that deserve attention. Here are some key points from the GDP report.
The oil sector
The Nigerian oil sector, a major pillar of the country’s economy, experienced remarkable developments in the first quarter of 2023. During this period, Nigeria achieved an average daily oil production of 1.51 million barrels per day (mbpd), a slight increase from 0.01 million barrels per day. mbpd compared to the first quarter of last year. In addition, this production volume surpassed the Q4 2022 figure by 0.17 MVPD, indicating a positive trend in the industry’s performance.
The real growth of the oil sector was -4.21% (year-on-year) in the first quarter of 2023, indicating an increase of 21.83 percentage points over the rate recorded in the corresponding quarter from 2022 (-26.04%). Growth increased by 9.18 percentage points compared to Q4 2022, which was -13.38%. On a quarterly basis, the oil sector recorded a growth of 20.68% in the first quarter of 2023.
In terms of its contribution to the overall economy, the oil sector accounted for 6.21% of Nigeria’s total real gross domestic product (GDP) in the first quarter of 2023. This figure represents a slight decrease from the corresponding period of 2022, but shows an improvement from the previous quarter, where the sector’s contribution was 6.63% and 4.34% respectively.
Non-oil sector
In the first quarter of 2023, the non-oil sector of the Nigerian economy has shown its resilience by recording a growth rate of 2.77% in real terms. While this growth is commendable, it represents a decrease of 3.30 percentage points compared to the rate observed in the same quarter of the previous year. In addition, it was 1.67 percentage points lower than the growth rate recorded in the fourth quarter of 2022.
Progress in the sector in the reference quarter was mainly driven by ICT; finance and insurance (financial institutions); Trade; Manufacturing (food, drink and tobacco); Build; and Transport & Storage (Road transport), good for GDP growth.
During the first quarter of 2023, the non-oil sector made a significant contribution to the country’s GDP in real terms, higher than the share recorded in the first quarter of 2022, which is 93.37%, and lower than the fourth quarter of 2022 registered as 95.66%.
Information & Communication
As before, the sector played a vital role in the country’s economy, showing positive growth in the first quarter of 2023 and contributing to the total gross domestic product (GDP).
In the first quarter of 2023, the information and communication sector accounted for 17.47% of total real GDP. This figure represents an increase from the same quarter of the previous year, when the sector contributed 16.20% to GDP. In addition, it exceeds the contribution of the previous quarter, which was 16.22%.
Finance and insurance
In the first quarter of 2023, financials accounted for a substantial 91.75% of the industry, while insurance accounted for 8.25% in real terms.
As a whole, the financial and insurance sector showed strong growth in nominal terms, with an annual growth rate of 22.37%. The financial institutions subsector experienced impressive growth, with a growth rate of 25.99%. However, the Insurance subsector faced challenges, due to a -7.25% decline in the growth rate.
The sector also showed positive quarter-on-quarter growth, at a rate of 12.55%. This growth indicates the industry’s resilience and ability to adapt to changing economic conditions. In addition, the contribution of the financial and insurance sector to nominal gross domestic product (GDP) was 4.11% in the first quarter of 2023. This contribution was an increase from the previous year, when it amounted to 3.80% of GDP amounted. In addition, it surpassed the previous quarter’s 3.30% contribution.
A faltering agricultural sector
In the first quarter of 2023, the agricultural sector experienced a remarkable downturn in economic performance. Quarter-on-quarter growth was -28.83%, indicating a significant decline compared to the previous quarter.
The decline in the growth rate of the agricultural sector is a cause for concern, despite the financial resources (Anchor Borrowers’ Programme) that the government has invested in it. In the first quarter of 2023, agriculture contributed 19.63% to the country’s nominal gross domestic product (GDP). However, this figure was lower than the figures recorded in both the first quarter of 2022 and the fourth quarter of 2022. In the corresponding period of 2022, agriculture contributed 21.09% to GDP, while in the fourth quarter of 2022 it accounted for a higher share of 24.90%.
The sector’s contribution to total GDP was 21.66%, down from its contribution in the same quarter of the previous year, where it accounted for 22.36% of GDP. In addition, it was lower than the significant contribution of 26.46% observed in the fourth quarter of 2022.
The slowdown in growth rates and agriculture’s reduced contribution to total GDP in the first quarter of 2023 may not be unrelated to challenges such as adverse weather conditions, limited access to finance and infrastructure constraints faced by the sector.
