Nigeria: GDP growth records best result in one year in Q4 2023
GDP growth accelerated to 3.5% year on year in the fourth quarter, from 2.5% in the third quarter. The print surprised markets on the upside and marked the strongest expansion since Q4 2022. The Nigerian economy grew 2.7% in 2023, down from 3.1% in 2022, but above the preceding 10-year average of 2.3%.
The improvement was spearheaded by a sharp rebound of the all-important oil sector: Output expanded 12.1% year on year in Q4 (Q3: -0.8% yoy). Additionally, growth in the non-oil sector of the economy rose to 3.1% in annual terms in Q4 (Q3: +2.7% yoy), on stronger manufacturing and agricultural momentum. Manufacturing sector growth improved to 1.4% in Q4, from the 0.5% increase recorded in the prior quarter. Moreover, the agricultural sector gained steam, growing 2.1% in Q4 (Q3: +1.3% yoy). Meanwhile, the services sector grew 4.0% annually in Q4, matching the third quarter’s result. Less positively, construction sector growth eased to 3.7% in Q4 from 3.9% in Q3.
The economy is forecast to expand at a slightly faster pace in 2024 than in 2023. The oil sector will remain in the driver’s seat thanks to an improved security situation in the Niger Delta and ramped up output in the Dangote oil refinery. Nonetheless, higher interest rates and inflation, and a weaker naira year on year will restrain the overall improvement.