Nigeria: Growth stalls in Q1
May 22, 2018
Nigeria’s recovery stalled in the first quarter, with growth edging down after hitting a two-year high in the final quarter of 2017. According to data released by the National Bureau of Statistics (NBS), GDP expanded 2.0% annually in Q1, slightly below Q4’s revised 2.1% increase (previously reported: +1.9% year-on-year). The result undershot expectations of a pick-up in growth and broke a sequence of five consecutive quarters of improving activity. Along with the national accounts data, the NBS also released revised oil production estimates for Q3 and Q4 of 2017.
The first quarter’s slight deceleration was due to a weaker performance by the non-oil sector. Non-oil activity expanded 0.8% annually in Q1, below Q4’s 1.5% expansion. Slower growth in the agricultural and services sectors drove the result and illustrates that the economic recovery is weak. Notably, trade and construction contracted, dragging on growth.
Meanwhile, the energy sector improved in the first quarter, helping buffer the slowdown elsewhere in the economy. Oil output averaged 2.00 million barrels per day (mbpd) in the first quarter, which was above the revised 1.95 mbpd recorded in the previous period (previously reported: 1.91 mbpd). Buoyed by higher oil prices, the oil sector expanded 14.8% annually in Q1, above Q4’s revised 11.2% increase (previously reported: +8.4% yoy).
Looking ahead, the recovery is expected to pick up steam in the coming quarters, albeit remain moderate and fragile overall. Firmer oil prices and improved foreign exchange rate liquidity should fuel activity; however, tight monetary policy, a weak business climate and a lack of structural reforms continue to cast a shadow over the country’s prospects.
Nigeria GDP Forecast
FocusEconomics panelists project that the economy will grow 2.6% in 2018, unchanged from last month’s forecast. In 2019, growth is seen rising to 3.0%.