…Real GDP growth in the manufacturing sector in the current quarter of 2018 was 3.39% (year on year)
MON, MAY 21 2018-theG&BJournal– Economists have always been bullish about the economy since it began its recovery journey late 2017 and they were not disappointed with the performance after the first quarter 2018, a year that began with so much skepticism and fears about the numerous risks-security, exchange rate complexities and overall macro stability in electoral cycle.
Patience Oniha, Director General, Nigeria Debt Management office, sums up what drives the optimism across board. ”The combination of fiscal and monetary policy strategies adopted by the federal government that has delivered results on several key parameters – GDP, inflation, external reserves, FX stability.”
Prior to the release of the latest GDP report by the National Bureau of Statistics (NBS), all the leading indicators pointed towards consolidation of recovery in 2018 and across board, most corporate Q1 performances reflected the gradual turn-around in fortune and the improving consumer confidence. Majority, especially in the financial services sector left the shareholders broadly happy and bullish, while international investors including Charles Robertson, Renaissance Capital Global Chief Economist, spoke of their surprise in the performance of most metrics-having accelerated growth, a stable currency and rising FX reserves.
”We think Nigeria will have one of the strongest growth accelerations in Africa in 2018, while the currency is well supported for 2018,” Robertson said at 9th Annual Pan-Africa 1:1 investor Conference in Lagos, last week.
This again is confirmed by the performance of the economy in Q1 2018 which came up better than expected and above all previous estimates. The Gross Domestic Product (GDP) grew by 1.95% (year-on-year) in real terms, a 2.8% points jump from first quarter of 2017 result, which was somewhat comforting growth at 0.91%.
Aggregate GDP at N28,464,322.01 million in nominal terms is also stellar compared to the first quarter of 2017 which recorded a nominal GDP aggregate of N26,028,356.03 million. 2018 Q1 result translates to year on year nominal growth rate of 9.36%. Quarter on quarter, real GDP growth was –13.40%.
This rate of growth is however lower relative to growth recorded in Q1 2017 by –7.70% points at 17.06% but higher than the proceeding quarter by 2.14% points at 7.22%.
According to an economist theG&BJournal spoke to, what this growth means is that the disruptions caused by the huge revenue shortfall from oil, the country’s main source of revenue is now behind us.
”It says to me that the economy managers are becoming more resourceful and dynamic in managing and meeting our expectations, in terms of policy and implementation of necessary reforms,” he said.
Real growth of the oil sector was 14.77% (year-on-year) in Q1 2018. This represents an increase of 30.37% points relative to rate recorded in the corresponding quarter of 2017. Quarter-on-Quarter, the oil sector grew by 13.24% in Q1 2018. The Oil sector contributed 9.61% to total real GDP in Q1 2018, up from 8.53% and 7.35% recorded in the Q1 2017 and Q4 2017, respectively.
According to the NBS, in the period under review, the nation recorded an average daily oil production of 2.0 million barrels per day (mbpd), higher than the daily average production recorded in the fourth quarter of 2017 by 0.05 mbpd.
The NBS report also reflected on the performance of major non-oil sectors which are gradually playing expected larger role in their over all contribution to GDP growth rate.
THE NBS REPORT (excerpts)
The non-oil sector itself grew by 0.76% in real terms during the reference quarter. According to the NBS, this is higher by 0.04% point compared to the rate recorded same quarter of 2017 and 0.70% point lower than the fourth quarter of 2017. This sector was driven mainly by Agriculture (Crop production); other drivers were Financial institutions and insurance, Manufacturing, Transportation and Storage and Information and Communication. In real terms, the Non-Oil sector contributed 90.39% to the nation’s GDP, lower than 91.47% recorded in the first quarter of 2017 and 92.65% recorded in the fourth quarter of 2017.
The Mining & Quarrying sector (which consists of Crude Petroleum and Natural Gas, Coal Mining, Metal ore and Quarrying and other Minerals sub-activities) grew nominally by 84.02% (year on year). Crude petroleum and natural gas is the major contributor to this increase with a growth rate of 84.27%. This growth is attributable to the relatively higher and more stable oil production in the nation as well as the higher crude oil price which is currently Over $70 per barrel. Quarrying and Other Minerals and Metal ore recorded growth rates of 50.41% and 49.87% respectively. The Mining & Quarrying sector contributed 13.92% to overall GDP in the first quarter of 2018, higher than the 8.27% contribution recorded in first quarter 2017 and the 8.50% recorded in Q4 2017.
In real terms, the Mining and Quarrying sector grew by 14.85% (year-on-year) in the first quarter of 2018. Compared to the same quarter of 2017 and fourth quarter 2017, it is higher by 30.25% points and 4.14% points respectively. Quarter on quarter, growth rate recorded is 11.80% .The contribution of Mining and Quarrying to Real GDP in the quarter under review stands at 9.67%, higher than the growth rate of 8.59% and 7.49% recorded in Q1 2017 and Q4 2017 respectively.
Four sub-activities make up the Agricultural sector: Crop Production, Livestock, Forestry and Fishery. sector grew by 5.80% year-on-year in nominal terms, showing a decline of 4.01% points and 4.33% points from Q1 2017 and the Q4 2017 respectively. Crop Production is expectedly the major driver of the sector.
This is evident as it accounts for 85.28% of overall nominal growth of the sector. In the first quarter of 2018, Agriculture contributed 17.42% to nominal GDP. This figure is lower than the rates recorded for the first quarter of 2017 and the fourth quarter of 2017 at 18.00% and 21.93% respectively.
The agricultural sector in the First quarter of 2018 grew by 3.00% (year-on-year) in real terms, a decrease by 0.38% points from the corresponding period of 2017 also a decrease by 1.23% points from the preceding quarter. The sector contributed 21.65% to overall GDP in real terms, higher than the contributions in the first quarter of 2017 and lower than fourth quarter of 2017 which stood at 21.43% and 26.13% respectively.
Nominal GDP growth of Manufacturing in the first Quarter of 2018 was recorded as 8.93% (year-on-year), – 7.70% points lower than figures recorded in the corresponding period of 2017 (16.63%) and –0.27% points lower than the preceding quarter figure of 9.20%. Quarter on Quarter growth of the sector is recorded at – 1.04%. The contribution of Manufacturing to Nominal GDP was 9.27% , lower than growth recorded in the corresponding period of 2017 at 9.31% but higher than the 8.53% recorded in the fourth quarter of 2017.
Real GDP growth in the manufacturing sector in the current quarter of 2018 was 3.39% (year on year), higher than the same quarter of 2017 and the preceding quarter by 2.03% points and 3.26% points respectively (Figure 6). Growth rate of the sector on a quarter-on-quarter basis was -3.16%. The contribution to real GDP in Q1 2018 was 9.91% .
In the first quarter of 2018, the nominal year on year growth rate of Trade stood at –2.12%. This indicates a drop of 11.71% points when compared to the first quarter of 2017 and 5.24% points lower than the preceding quarter. The quarter on quarter growth rate was –11.57%. Trade’s contribution to Nominal GDP in the first quarter of 2018 was 18.08%, lower than the contribution in the same quarter of the previous year (20.20%) and the preceding quarter(18.60%).
In nominal terms, Real Estate Services in the first quarter of 2018 grew by –8.38%, lower by 18.94% points than the growth rate reported for the same period in 2017 and lower by 5.03% points compared to the preceding quarter. Quarter-on-Quarter, the sector growth rate was –30.37%. The contribution to nominal GDP in Q1 2018 was 5.87%, lower than the 7.01% reported in corresponding quarter of 2017 and lower than the 7.67% reported in the preceding quarter.
Real GDP growth recorded in the sector in Q1 2018 stood at -9.40%, lower than growth recorded in Q1
2017 by 6.30% points and lower by 3.48% points relative to Q4 2017. Quarter-on-quarter, the sector grew by –30.57% in the Q1 2018. It contributed 5.63% to real GDP in Q1 2018, lower than the 6.34% it recorded in the corresponding quarter of 2017 and lower than the 7.03 % in the preceding quarter .
The Finance and Insurance Sector consists of the two subsectors, Financial Institutions and Insurance, which account for 86.28% and 13.72% of the sector respectively in real terms in Q1 2018.
As a whole the sector grew at 13.82% in nominal terms (year on year), with the growth rate of Financial Institutions as 13.10% and 18.61% growth rate recorded for Insurance. The overall rate was lower than that in Q1 2017 by 0.01% points, and higher by 12.57% points than the preceding quarter. Quarter on Quarter growth was 8.43%. The sector’s contribution to the overall nominal GDP was 3.76% in Q1 2018, higher than the 3.61% it represented the year before, and higher from the contribution of 3.15% it made in the preceding quarter. 2017 by 0.15% points and 0.60% points respectively.
Again driven by the Financial Institutions‘ activity, growth of the sector in real terms totaled 13.30%, higher by 12.64% points from the rate recorded in 2017 first quarter and up by 13.08% points from the rate recorded in the preceding quarter. Quarter on Quarter growth in real terms stood at 8.33%. The contribution of Finance and Insurance to real GDP totaled 3.55%, higher than the contribution of 3.19% recorded in the first quarter of 2017, and higher than 2.83% recorded in the preceding quarter.
Nominal growth in the Arts, Entertainment and Recreation sector was 0.41% in first quarter 2018 (year-on-year), representing a decrease of 21.06% points relative to the same period a year earlier, and a decrease of 3.76% points compared with the preceding quarter. On a quarterly basis, growth was recorded at 31.51%, higher than quarter-on-quarter growth of Q4 2017 recorded at 9.54%. The activity contributed 0.28% to total nominal GDP in first quarter 2018, lower than the 0.31% it contributed in Q1 2017 and higher than 0.20% it contributed in fourth quarter of 2017.
In real terms, the activity grew by 0.30% year on year, which was lower than the rate recorded in Q1 2017 by 11.37% points, and lower by 3.24% points when compared with that of the preceding quarter. Quarter on Quarter, growth stood at 31.51% in real terms, higher than quarter-on-quarter growth recorded in Q4 2017 at 9.54%. Arts, Entertainment and Recreation contributed 0.29% to real GDP in Q1 2018, slightly lower than the 0.30% recorded one year before, but higher than 0.19% recorded in the fourth quarter of 2017 by 0.10% points.
