The national accounts for Q4 2017 show an acceleration in growth from 1.4% y/y in the previous quarter to 1.9%. Our expectation, shared with the wire services, was GDP growth of 2.1% y/y.
The acceleration was in part a reflection on improved stability in the Niger Delta since the oil economy expanded by 8.4% y/y, and therefore on the political leadership for responding to local sensitivities. It was also driven by an improvement in the non-oil economy, which expanded by 1.5% y/y following the previous quarter’s -0.8%. The data is not seasonally adjusted.
- The NBS notes in its commentary that oil production averaged 1.91 mbpd in Q4 2017, compared with 2.03 mbpd the previous quarter and 1.76 mbpd in the comparable year-earlier period. We are seeing, therefore, a diplomatic dividend on a y/y basis.
- Oil’s share of real GDP amounted to just 7.2% in Q4 2017, which makes it the fifth largest sector in the economy after agriculture, trade, information and communications, and manufacturing. Through its linkages across other sectors, however, the indirect oil economy may be as large as 40% of GDP.
- In the non-oil economy, the decent y/y growth posted by transportation and storage (double-digit) and construction may indicate some reward for the FGN for its infrastructure spending. Sectors more responsive to consumer spending (such as information and communications) disappointed.
Sources: National Bureau of Statistics (NBS); FBNQuest Capital Research
- Turning to the Q1 2018 data, we again see positive base effects for the oil economy. Output averaged 1.69 mbpd in Q1 2017 and is currently running at +/- 2.0 mbpd. The non-oil economy is generally soft in the first quarter as households recover from seasonal festivities. We are looking for GDP growth of 2.6% y/y in the current quarter.