GDP growth slows in Q1

National Bureau of Statistics rebases GDP series: GDP expanded 3.1% year on year in Q1 (Q4 2024: +3.8% yoy), disappointing markets and marking the worst result since Q1 2024. Meanwhile, the National Bureau of Statistics changed the base year of its GDP series from 2010 to 2019. It also altered the weights of different sectors and added new ones. As a result of these changes, the size of the economy in 2024 is now estimated at USD 252 billion, roughly a third larger than the prior value of USD 188 billion.

Slowdown is broad-based: Growth in the oil sector edged down to 1.9% in Q1 from 2.1% in Q4. Meanwhile, the non-oil sector expanded 3.2% in Q1, below Q4’s 3.8%. Taking a deeper dive into this side of the economy, agricultural output growth slowed to a near halt in Q1, falling to 0.1% from 2.5% in Q4. Meanwhile, the services sector posted a solid 4.3% rise, though it fell short of Q4’s 4.8% increase. Similarly, construction activity grew at a softer rate of 6.2% in Q1 (Q4: +6.5% yoy). Lastly, the manufacturing sector kicked into a higher gear, expanding 1.7% in Q1 after Q4’s 1.3% expansion.

GDP to have picked up in Q2: Our Consensus is for GDP growth to have accelerated in Q2, supported by rising oil production, cooling price pressures and brisker credit growth. Nigeria’s economy is expected to lose some momentum in H2, though the start of monetary policy easing should cushion the slowdown. Greater insecurity in the oil-producing Niger Delta area and slowing reform momentum are downside risks.

Panelist insight: Analysts at the EIU commented on the public finance implications of the rebase: “The rebase of the economy gives the impression of greater fiscal flexibility, but this is largely illusory, given such a high debt service/revenue ratio. Our view that fiscal policy is unsustainable, which will [lead to] tax rises down the line, is unchanged.” Meanwhile, on the trade front, Oxford Economics’ Brendon Verster said: “President Donald Trump announced another round of disruptive tariffs on July 31 […]. We maintain our view that the direct impact of Mr Trump's tariffs on Nigeria should be relatively muted, with the largest threat still firmly centred on the effects on global oil demand and Brent prices. Moreover, trade agreements between the US and some of its major trading partners may calm global trade jitters somewhat.”

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