Nigeria: Economic growth cools slightly in Q3
Economic growth in Sub-Saharan Africa’s largest economy cooled to 4.0% year-on-year in the third quarter from 5.0% in Q2. Despite recording the fourth consecutive quarter of growth, the economy remained around 5.0% below its pre-pandemic level.
The softer outturn came on the back of easing growth in the non-oil sector, which expanded 5.4% in annual terms after clocking a 6.7% increase in the second quarter. This reflected cooling growth in the agricultural (Q3: +1.2% yoy; Q2: +1.3% yoy) and services sectors (Q3: +8.4% yoy; Q2: +9.3% yoy), while output in the industrial sector tumbled at a quicker rate of 1.6% in the third quarter (Q2: -1.2% yoy).
Meanwhile, the key oil sector remained in the doldrums, with activity diving 10.7% over the same period last year. This marked the sixth consecutive quarter of falling output, but was up from the second quarter’s 12.7% contraction. Higher crude oil prices were not enough to offset the impact of a drop in oil output, with production easing from 1.61 million barrels per day (mbpd) in the second quarter to 1.57 mbpd in the third quarter.
While activity should continue to grow in the final quarter of this year and throughout 2022 on the back of firming domestic and foreign demand, some lingering restrictive measures to combat the spread of Covid-19 will likely remain a feature of the economy. Moreover, uncertainty over vaccine availability and the evolution of the pandemic amid more infectious strains of the virus, as well as high inflation, elevated unemployment, security challenges and social tensions cloud the outlook. That said, progress on the vaccination front should see the economy gain momentum next year, while the Petroleum Industry Bill should buoy foreign capital inflows and fixed investment, as well as the broader economy further down the line.