…For the oil sector, we point out that domestic oil production has increased modestly in recent months after declining to 1.43 mb/d (including condensates) in March
…We estimate an oil sector growth rate of 22.95% y/y in Q2-24 (Q1-24: +5.11% y/y | Q2-23: -13.43%y/y) underpinned by the low base from the prior year
SAT JULY 20 2024-theGBJournal| Based on recent economic events and data, business activities in the non-oil sector have remained lacklustre, reflecting a weak consumer demand amid higher cost pressures and tight financial conditions.
Indeed, the Stanbic IBTC Composite PMI averaged 51.1 points in Q2-24, a moderation from the 52.2 points recorded in Q1-24. Specifically, the Composite PMI fell to its lowest level in seven months to 50.1 points in June after improving in May (52.1 vs April: 51.1).
This hints that growth in the non-oil sector has remained subdued, synchronizing neatly with our estimate of +2.89% y/y in Q2-24 (Q1-24: +2.80% y/y | Q2-23 +3.58% y/y).
For the oil sector, we point out that domestic oil production has increased modestly in recent months after declining to 1.43 mb/d (including condensates) in March.
Precisely, oil production increased consecutively in Q2-24, rising from 1.45 mb/d in April to 1.50 mb/d in June, primarily due to resumed operations in oil terminals that were shut down for repairs as well as the commencement of oil production activities in new oil fields.
Overall, oil production averaged 1.47 mb/d in Q2-24, trailing behind the previous quarter (Q1-24: 1.54 mb/d) but significantly above the level recorded in Q2-23 (1.39 mb/d).
Consequently, we estimate an oil sector growth rate of 22.95% y/y in Q2-24 (Q1-24: +5.11% y/y | Q2-23: -13.43%y/y) underpinned by the low base from the prior year. Altogether, we estimate GDP growth of 3.96% y/y in Q2-24 (Q1-24: +2.98% y/y | Q2-23: +2.51% y/y).
Nevertheless, we retain our GDP growth forecast for 2024E at 3.20% y/y. We expect the MPC to acknowledge the growth in the oil and non-oil sectors in Q1-24 despite challenges posed by low Foreign Direct Investment, high inflationary pressures and tight financial conditions.
However, we expect the MPC to maintain an optimistic outlook while retaining its average growth forecast of 3.38% y/y for 2024E.-Projection and estimates provided by Cordros Research
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