GDP growth records quickest expansion in three years in Q4

GDP growth exceeds market expectations: GDP growth edged up to 3.8% year on year in the fourth quarter from 3.5% in the third quarter, surprising markets on the upside and marking the best result since Q4 2021. Looking at 2024 as a whole, the economy expanded 3.4%, improving from both 2023’s 2.7% and the 2014–2023 average of 2.0%.

Non-oil activity underpins acceleration: The acceleration was driven by non-oil activity, which grew 4.0% in Q4, up from Q3’s 3.4%. The services sector grew 5.4% in the final quarter, edging up from the third quarter's 5.2% increase and marking the best reading since Q4 2022. In addition, the agricultural sector gained steam, growing 1.8% in Q4 (Q3:+1.1% yoy). Moreover, manufacturing sector growth accelerated to 1.8% in Q4, following the 0.9% expansion in the previous quarter. Meanwhile, the construction sector expanded 2.9% for the second successive quarter. That said, growth in the key oil sector slowed to 1.5% in Q4 from 5.2% in Q3, hit by slower momentum in crude production.

GDP growth to remain upbeat ahead: Our panelists see Q1 GDP growth near Q4’s outturn, comfortably above trend as price pressures cool and the Dangote refinery continues to raise its output. These factors, coupled with interest rate cuts in the second half of the year, will underpin momentum in 2025 as a whole; growth is expected to remain close to 2024’s figure, though our panelists could hike their forecasts in the coming weeks, given Q4’s upside surprise. Slowing reform momentum and greater insecurity in the oil-producing Niger Delta region pose downside risks.

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