Figures released today by the National Bureau of Statistics (NBS), show Nigeria’s Gross Domestic Product (GDP) grew in Q4 2017 by 1.92% (year-on-year) in real terms, maintaining its positive growth since the emergence of the economy from recession in Q2 2017.
This growth is compared to a contraction of -1.73% recorded in Q4 2016 and a growth of 1.40% recorded in Q 2017. Quarter on quarter, real GDP growth was 4.29%. The year 2017 recorded a real annual growth rate of 0.83% higher by 2.42% than -1.58% recorded in 2016.
In the quarter under review, aggregate GDP stood at N31,209,137.74million in nominal terms higher when compared to N29,169,058.99 million in Q4 2016, resulting in a Nominal GDP growth of 6.99%.
GDP is the total value of goods and services produced within the borders of a country, in a specified period. Usually a quarter or on a yearly basis.
Oil sector growth in 2017
The annual growth of the oil sector stood at 4.79% higher than the previous year’s growth of -14.45%. The Oil sector contributed 7.17% of total real GDP in Q4 2017, up from figure recorded in the corresponding period of 2016 and down from the preceding quarter, where it contributed 6.75% and 10.04% respectively. The sector’s annual contribution was 8.68% in 2017 and 8.35% in 2016.
Non Oil sector Growth in 2017
The non-oil sector recorded an annual growth of 0.47% compared to -0.22 in 2016. This sector was driven this quarter mainly by Agriculture (Crop), Trade and Transportation and storage. In real terms, the Non-Oil sector contributed 92.83% to the nation’s GDP, lower from share recorded in the fourth quarter of 2016 (93.25%) but higher than in the third quarter of 2017 (89.96%). Annual contribution was 91.32% and 91.65% in 2016.
What do analysts think?
Wale Okunrinboye, a Fixed Income and Currency Analyst with the Ecobank Group, the stronger non-oil growth lifts optimism regarding Nigeria’s growth prospects in 2018. The bank has shifted its forecast for growth to 3%, from an earlier target of 2.6%.
Tunji Andrews, Economist, and host of the Money, Business and Economy show on Nigeria Info 99.3 sees the current GDP numbers as weak, but better than expected.
Oil is key
Though the oil sector contributes a small fraction of Nigeria’s GDP, it is the key foreign exchange earner for the country, as well as revenue for the government. The drop in crude oil prices and production volumes was what pushed Nigeria’s economy into recession in August 2016. .
While oil prices have rebounded, largely due to the pact by OPEC members, nothing is certain. Militants in the Niger Delta have ratcheted their threats, as elections approach. A militant attack on oil installations, could have a negative effect on the country’s oil sector.
What it means for the economy
Nairametrics believes despite the relatively weak growth, posting 4 consecutive quarters of GDP growth rate was significant considering the disaster that was 2016. As the economy returns to growth, we expect foreign investors to continue to funnel investments into the country, further spurring economic growth on all fronts.
For retail investors
The stock market has always been the bellwether for the economy and flew straight out of the block as one of the best performing exchange in the world in early 2018. The latest results will help instill further confidence in the market boosting stock valuations. It is important to note that the market still fell 0.66% suggesting that investors may not have been overtly impressed with the GDP results.
For small businesses
If you are a small business, then the latest GDP report should excite you. The result was positive on all fronts as both oil and non-oil GDP grew. Also sectors that have been in a recession for weeks returned back to growth, a sign that businesses are recovering after a protracted period of contraction. With a positive growth that confirmed for the whole of 2017, businesses can not go into 2018 more optimistic about the economy than they have been in recent years. As results of quoted companies rolls in in the next few days, analysts will have on eye on increase in company revenues and cash flows.
Employees in the Financial Services sector such as banking and insurance, power sector, agricultural sector, food and tobacco manufacturing, construction and transportation should all heave a sigh of relief as they ended the year with various levels of growth. On the wider economy, massive job losses should not be expected this year either. A return to stable growth also suggest employers may consider increasing salaries this year further boosting economic activity.