Nigeria: Economic growth eases to one-and-a-half year low in Q1
May 25, 2020
Economic activity lost steam in the first quarter, with GDP increasing 1.9% (Q4 2019: +2.6% year-on-year). Q1's outturn marked the worst reading since Q3 2018.
Waning activity in both the oil and non-oil segments of the economy drove the slowdown. Annual growth of the non-oil economy cooled to 1.5% (Q4 2019: +2.3% yoy), dragged down by a marked loss of momentum in the manufacturing industry and a sharper contraction of the trade sector. Agricultural output growth, meanwhile, held pace in Q1.
As for the all-important energy sector, activity eased but remained robust nonetheless, growing 5.1% over the same period last year (Q4 2019: +6.5% yoy). Despite the plunge in global oil prices in March amid the Covid-19 outbreak and tensions between OPEC+ members, oil production was raised to compensate for the loss of income—coming in at 2.07 million barrels per day (mbpd), the highest level since Q4 2015 (Q4 2019: 2.00 mbpd).
The Covid-19 outbreak and collapse in international crude prices are set to push the economy back into recession this year. Job losses and lower remittances are poised to hammer private consumption, while investment activity will suffer amid project delays and uncertainty. The oil-price shock blow to the country’s FX earnings and fiscal revenues are major risks ahead.
Author: Javier Colato, Economist