GDP growth records quickest upturn in nine years in Q1

The economy surged in the first quarter, expanding 4.6% year on year, which more than doubled Q4 2023’s upwardly revised 2.0% increase and marked the strongest increase since Q1 2015. On a seasonally adjusted quarter-on-quarter basis, economic growth improved to 2.1% in Q1 (Q4 2023: +0.3% s.a. qoq), marking the fastest growth since Q4 2016.

Oil sector growth catapulted to an eight-and-a-half-year high of 6.9% year on year in the first quarter (Q4 2023: +2.2% yoy), spearheading the upturn. In particular, oil production ramped up, increasing by over 15% in March and over 5% in the quarter as a whole (Q4 2023: +4.5% yoy). Elsewhere in the economy, non-oil output rose 3.9% year on year, accelerating from the prior quarter’s 2.0% expansion on a broad-based improvement. The tertiary sector underpinned the upturn on the back of a sharper rise in wholesale and retail trade plus a double-digit increase in transport sector activity, which added nearly two percentage points to the reading. Additionally, a rebound in construction output contributed to faster growth in industrial production, and the agricultural sector also gained momentum.

Our panelists expect the economy to lose steam through end-2024 as elevated interest rates and inflation, coupled with a weaker kwanza year on year, constrain activity. That said, over 2024 as a whole, our Consensus is for economic growth to more than double from 2023, supported by rising oil output driving a rebound in exports; oil and gas products accounted for over 90% of total exports last year.

Gerrit van Rooyen, analyst at Oxford Economics, commented: “We forecast economic growth will pick up to 2.3% in 2024 […]. Our growth projection for 2024 partly reflects a modest bounceback in oil production following the completion of extensive maintenance at one of the floating, production, storage and offloading (FPSO) units in Q1 2023. Non-oil GDP will still be supported by investment in oil refining, mining exploration, transport infrastructure, renewable energy, and the extension of the privatisation programme to a second round (2023-2026). Moreover, the government has budgeted for higher expenditure on goods and services in 2024.”

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