Nigeria: GDP growth steady in Q3
GDP growth was unchanged at 2.5% year on year in the third quarter. Q3’s reading marked the joint-best result since Q4 2022.
Growth in the non-oil sector of the economy decelerated to 2.7% in Q3 from 3.5% in Q2. The downturn was broad-based and chiefly spurred by naira weakness and the removal of fuel subsidies in June. Agricultural sector growth slowed to 1.3% (Q2: +1.5%), while growth in the services sector ticked down to 4.0% in Q3 from 4.4% in Q2. Moreover, the manufacturing sector weakened markedly, posting a modest expansion of 0.5% (Q2: +2.2%). On a brighter note, growth in the construction sector accelerated to 3.9% in Q3 from 3.4% in Q2.
Meanwhile, the oil sector contracted at a significantly softer rate of 0.8% in Q3 (Q2: -13.4%), as year-on-year crude production growth accelerated sharply to 19.5% in Q3 from 2.0% in Q2.
Economic growth is seen decelerating slightly in Q4 before picking up steam in 2024. Next year’s upturn will be chiefly driven by a stronger oil sector; an improved security situation in the Niger Delta is set to boost oil production growth. Moreover, private consumption and fixed investment are seen strengthening. That said, stubbornly high inflation and elevated interest rates will cap the overall improvement. Monetary policy—the Central Bank skipped its September and November meetings—and the strength of the naira are key factors to watch.