Nigeria: Economy gathers pace in Q3 on stronger non-oil sector
The economy gathered pace somewhat in the third quarter, with annual GDP growth accelerating to 2.3% from 2.1% in the second quarter. The slight pick-up was mainly driven by strengthening momentum in the non-oil segment of the economy. Meanwhile, the vital oil sector expanded more modestly compared to the prior quarter, but the upturn was still robust.
Growth of the non-oil sector of the economy rose to 1.8% annually (Q2: +1.6 year-on-year) on the back of quickening activity in both the agriculture and industrial sectors. Agricultural output accelerated in Q3 amid more upbeat production in the crop and fishing sub-sectors. Similarly, the industrial sector grew 3.2% on a year-on-year basis (Q2: +2.8% yoy), the strongest expansion in a year and a half and underpinned by a modest rebound in manufacturing output and a pick-up in construction activity. For its part, growth of the services sector held steady at a modest 1.9% year-on-year.
Meanwhile, the all-important energy sector expanded again in Q3, after it broke a four-quarter streak of contractions in Q2. That said, activity in the oil sector eased slightly, growing 6.5% over the same period last year (Q2: +7.2% yoy). Oil production, which accounts for the largest share of overall mining and quarrying sector output, rose to 2.04 million barrels per day (mbpd) in Q3 (Q2: 1.98 mbpd), marking the highest reading since Q1 2016; however, sliding oil prices for much of the quarter dragged on the sector’s overall expansion.
Looking ahead, economic activity is projected to gain speed next year, mainly on the back of more upbeat private consumption, which should be supported by the full rollout of the minimum wage hike. That said, the outlook remains challenging, weighed on by elevated unemployment, insecurity challenges, power shortages, low crude prices and a more subdued global economic backdrop.