Nigeria’s Gross Domestic Product (GDP) grew by 2.28% in real terms, in the third quarter (Q3) of 2019, up from 1.81% growth recorded in the third quarter of 2018. This means there was a 0.47% point increase in the growth of the Nigerian economy (year-on-year).
According to the data released by the National Bureau of Statistics (NBS), the Nigerian economy grew by 2.28% in Q3 2019, up from 2.12% growth recorded in Q2 2019. This indicates an increase of 0.16% points between Q2 and Q3 2019 (Quarter on Quarter).
Growth overview: A quick breakdown shows that the Oil sector grew by 6.49% from the 7.17% growth recorded in the previous quarter. This means the oil sector grew at a slower rate.
On the other hand, non-oil GDP maintained a slow growth of 1.85% in Q3 2019, from 1.64% in the previous quarter.
According to the report, Nigeria’s aggregate GDP stood at N37.8 trillion in nominal terms, an increase of 13.30% over the performance posted in Q3 2018.
The Oil Sector: In Q3 2019, the oil sector of the Nigerian economy posted a strong performance with a 9.40% point increase relative to the rate recorded in the corresponding quarter of 2018.
Notably, the oil sector grew high by 6.49% in the Q3 2019, as against -2.91% dip recorded in Q3 2018. However, the latest growth in the sector showed a dip when compared to 7.17% growth recorded in Q2 2019.
In terms of contribution, the oil sector contributed 9.77% to total real GDP in Q3 2019, up from 8.98% recorded in the corresponding quarter.
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The Non-Oil Sector: The report shows that Nigeria’s non-oil sector contracted in Q3 2019. The non-oil sector grew by 1.85% in real terms during the quarter under review. This was –0.48% points lower than the figure recorded in the same quarter of 2018 (2.32%), but a 0.20% point higher than the second quarter of 2019 (1.64%).
During the quarter, the growth in the non-oil sector was driven mainly by sectors which include agriculture, Information and Communication, accommodation and food services, transportation and storage,
In terms of contributions to GDP, the non-Oil sector remains the biggest contributor to GDP.
The sector contributed 90.23% to the nation’s GDP, lower than the share recorded in the third quarter of 2018 (90.62%).
Key Sectors’ performance: Major sectors that witnessed a decline in growth include trade sector and the real estate. Specifically, in real term, the trade sector contracted by -1.45% in Q3 2019, down from 0.98% in Q3 2018. The big contraction recorded in the sector may be largely attributed to the closure of the country’s land borders. Recall, that Nigeria closed its land border in August 2019.
Also, the real estate sector continued in its low ebb as it contracted by -2.31%, from -3.84% recorded in Q2 2019, and -2.68% in Q3 2018.
The industrial sector recorded the highest growth of 3.12% when compared with other sectors, followed by the agricultural sector which grew to 2.28%, while the service sector slowed down with a growth of 1.87%.
On the other hand, the agricultural sector’s contribution to GDP improved to 29.25%, higher than the second quarter of 2019 which stood at 22.78%, this means that agriculture contribution in Q3 2019 rose by 6.46% points.
The manufacturing sector grew by 1.10% in Q3 2019 from 1.92% in Q3 2018. This also means the sector slowed year-on-year.
Also, the sector contribution to GDP stood at 8.74%, lower than the 8.84% recorded in the third quarter of 2018 and the 9.08% recorded in Q2 2019.
The Key takeaways: GDP is Nigeria’s biggest economic data, and it measures the monetary value of everything produced in the country. It depicts the nation’s total economic activity. A decline in GDP means major economic activities are slow or sluggish, which may be a result of several factors.
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For the latest data, the economic growth of 2.28% shows an improved performance when compared to the third quarter of 2018 (1.81%). According to NBS, the improvement in GDP was likely aided by stability in oil output.
However, the 2.28% GDP growth suggests the economy posted the biggest growth in the year.
Meanwhile, the service sector recorded the slowest growth in the year. This is not good for the economy as the sector represents the largest contributor to the nation’s GDP.
On the positive side, the industrial sector posted the biggest growth for the past six quarters.
Expectations are high for the Nigerian economy as the world bank’s 2.1% annual growth forecast for 2019 may eventually be surpassed.
Meanwhile, spill-over effects of the border closure may pose a further threat to the economy going into 2020.