TUE, FEBRUARY 12 2019-theG&BJournal- Nigerian economy jumped in Q4 2018 by the largest amount since the oil price crash of 2014-2016 in the latest sign that the country is getting its economic recovery policy right.
Gross Domestic Product (GDP) rose 1.9% in 2018, -0.8% more than the previous year, driven largely by Q42018 performance, with most of the growth coming from the non-oil sector. The Q4 2018 also is the biggest quarterly increase in recent times, a 2.4% growth in real terms (year-on year).
There were also signs that activity picked up exponentially in the non-oil sector, with total annual contribution recorded at 91.40%, a growth rate of 2% in 2018, according to National Bureau of Statistics (NBS) data released today. The bright spots in the official data was led by agriculture which grew 14.27% in 2018, higher than 11.29% recorded in 2017 and manufacturing which contributed 9.75% to total nominal GDP, higher than its contribution, of 8.83% in 2017, suggesting bigger support from export and indicating that the economy held up throughout last year.
The latest data shows that Nigeria, the biggest economy in Africa is already outperforming its oil exporting peers including Venezuela, Equatorial and LATAM and economy observers believe the country will do better given that oil prices is unlikely to repeat the fall of 2014-16.
‘’ My base case is that Nigeria’s GDP will do better in 2019-23 than in 2015-19 whoever is president, because Nigeria will no longer be dealing with the immediate shock of the fall in the oil price. This is in line expectations of 2.0% growth this year and 2.5% in 2020. That does mean unemployment will remain a significant challenge,’’ say Charles Robertson, Global Chief Economist at Renaissance Capital.
The oil sector contribution was marginal, reflecting the turmoil in the global markets. The sectors contribution to aggregate real GDP was 8.6% in 2018 and slightly lower than the 2017 figure of 8.7%. The sector managed growth of 1.14% in 2018 compared to the hefty 4.69% percent recorded in 2017. Oil output was 1.9 mb/p reflecting a continuous drop since Q1 when it reached 2mb/d.
Analysts expect Nigeria to roll out further economic support policies to consolidate these gains. There are also suggestions that oil would rise but according to Robertson to get better long term growth there has to be a doubling of investment to GDP, a more competitive currency. ‘’The market rate today is overvalued by about 20%,’’ he says. And of course ‘’a tripling of electricity consumption (not just generation, it has to be distributed too) – is essential for industrialisation and diversification.’’
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