Nigerians spent a total of N83.2 trillion as consumption expenditure in the fiscal year ended December 2016. This is according to Gross Domestic Product (expenditure approach) data from the National Bureau of Statistics.
Nigerians consumption expenditure of N83.2 million is higher than the N74.4 trillion spent in 2015. All figures represents nominal expenditure and does not take account of inflation.
A cursory view of the data reveals government expenditure was N5.5 trillion compared to N5.6 trillion same period last year. Over N15 trillion was spent on Gross Capital Formation (Investments) compared to N14 trillion a year earlier. Nigeria also recorded a net import of N2.3 trillion in 2016 compared to N31 billion in net imports for the prior year.
Consumption expenditure rose every quarter of 2016 compared to the same period in 2015 as household spend more to augment for the rising inflation. This represents about 81% of GDP compared to 78% a year earlier.
We also observed that consumption expenditure was highest in the fourth quarter of the year followed by the third, second and first respectively. The same pattern was observed in 2015.
Employee compensation was N25.8 trillion in 2016 compared to N24.7 trillion in 2015, representing a 4% increase. However, when adjusted for inflation, it will appear that employees had better purchasing power in 2015 than in 2016.
Compensation of Employees
Employee compensation for the year was N25.8 trillion compared to N24.7 trillion a year earlier. Employees earned about N7.6 trillion in the second quarter of 2016, the highest in the 8 quarters under review.
The report also indicates that Nigerians saved about N10.7 trillion in 2016 compared to N10.9 trillion in 2015. This represents about 12% of GDP.
How GDP is computed
Gross Domestic Product, GDP, is calculated using two approach the GDP by Income approach and the GDP by Expenditure approach.
The expenditure approach sums up Consumption + Investment + Government Purchases + Net Exports.
The income approach sums of GDP = Compensation of employees + Rent + Interest + Proprietor’s Income + Corporate Profits + Indirect business taxes + Depreciation + Net foreign factor income.
To calculate Real GDP, you divide nominal GDP by price index and multiply by 100%.
Real GDP = (Nominal GDP / price index) X 100
To calculate Real GDP Growth Rate you subtract Real GDP of the current year less the GDP of the Prior year divided by the GDP of the current year.
Growth rate =[(Real GDP of current year – Real GDP of prior) / Real GDP of current year] X 100 %