The Lagos Chamber of Commerce and Industry (LCCI) has stated that the recently released Q1 GDP data was a “pleasant surprise” for most manufacturers, though foreign exchange dependent manufacturing sectors have not had a good experience over the past year.
This was disclosed by Dr Muda Yusuf, Director-General, LCCI, in a statement on Sunday, after the NBS produced Nigeria’s Q1 GDP data. The report revealed that the manufacturing sector grew by 3.4%, indicating the first expansion in the past three quarters.
The LCCI boss stated that the manufacturing sector’s recovery was unexpected, due to FX liquidity issues faced by most manufacturers over the past 12 months.
What the LCCI said about the Q1 GDP figures
“Evidently, the economy is still struggling to recover from the shocks of the pandemic, and related slip into recession,” Yusuf said.
“However, the first-quarter GDP data contained a few pleasant surprises.
The agricultural sector expanded by 2.28% despite the ravaging effects of insecurity, farmers/herders clashes, and the displacement of many farming communities.
Most foreign exchange dependent manufacturing sectors have not had a good experience over the past one year.
Admittedly, segments of manufacturing with high levels of backward integration had lesser degrees of shocks from the forex illiquidity and exchange rate depreciation in the economy.”
Yusuf stated that the growth of 6.31% recorded in the ICT sector was expected, given the opportunities created for ICT in the new normal, and that the cost-reflective tariff appeared to have impacted positively on the electricity sector, which recorded 8.66%.
The LCCI boss added that the continued contraction of the trade sector was worrisome as the sector was dealing with issues arising from exchange rate depreciation and forex illiquidity, high inflationary pressures, and weak purchasing power.
“Yet the sector is one of the biggest sources of employment, especially in the self-employment space. It is equally worrisome that the transportation sector experienced the worst contraction at 21.9 percent in the first quarter of 2021.
This may be as a result of the growing insecurity on our roads, and this goes to demonstrate the multidimensional impact of insecurity on the economy.
The hospitality and entertainment sectors have been in recession for over a year and the government needs to do a lot more to salvage the sector from complete collapse,” he urged.
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Nigeria’s GDP grew by 0.51% (year-on-year) in real terms in the first quarter of 2021. This is slower than the 1.87% growth recorded in the corresponding quarter of 2020, but higher than 0.11% recorded in the previous quarter (Q4 2020).
