Nigeria: Growth gains steam in Q3
Nigeria’s recovery regained some lost momentum in the third quarter, after growth fell to a one-year low in the second quarter. According to data released by the National Bureau of Statistics (NBS), GDP expanded 1.8% annually in Q3, above Q2’s 1.5% increase, although still below market expectations of a stronger pick-up to around 2.0%. The acceleration was broad-based, with better performances recorded by both the non-oil and oil segments of the economy.
Growth in the non-oil sector of the economy gained steam in the third quarter, coming in at 2.3% annually (Q2: +2.1% yoy). Faster growth in the agricultural and services sectors drove momentum, while the industrial sector contracted mildly in Q3. Improved exchange rate liquidity and higher fiscal spending likely boosted momentum broadly, while better crop production fueled the improvement in the agricultural sector. That said, agricultural activity was still weak in a historical context, likely weighed on by the ongoing farmers and herdsmen conflict.
Meanwhile, the all-important energy sector continued to contract in the third quarter, although at a weaker pace than in the previous period. Activity in the oil sector fell 2.9% over the same period last year, after tumbling 4.0% in Q2. Higher oil production drove the sector’s slight improvement, partly thanks to reduced pipeline disruptions. Oil output rose from 1.84 million barrels per day (mbpd) in Q2 to 1.94 mbpd in Q3. In addition, firm energy prices helped boost the sector in the third quarter.
Looking ahead, growth is seen strengthening going forward thanks to rising oil production, better foreign exchange rate allocation and a pick-up in fiscal spending. However, political uncertainty is clouding the outlook ahead of the 2019 election.