In 2017, real GDP turned to positive growth in the second quarter and sustained its acceleration on a year-on-year basis. Annual real GDP growth rate in 2017 was recorded at 0.82%, signifying economic recovery when compared to –1.58% in 2016.
- Real Household Consumption and Government Consumption Expenditures generally declined in 2017 at –0.99% but improved compared to 2016 (-5.71%). Domestic demand was still weak.
- Net Exports grew significantly in real terms in 2017, which was mainly driven by the strong performance in the third quarter. However, this was slower than 2016 (22%).
- National Disposable Income declined by 1.52% in 2017, majorly due to the continuous decline in the largest component— Operating Surplus which recorded a negative annual growth rate, of –2.11%.
- Compensation of Employees performed strongly in 2017, of an 11.14% annual growth rate compared to –9.68% recorded in 2016. However, the expansion in this category was not enough to stem a negative
In summary, Nigeria’s economy exited the recession and slowly started its recovery in the second quarter of 2017, although improvements in domestic consumption and the business environment are still necessary to further stimulate growth. Trade surplus in 2017 contributed significantly to overall economic growth and recovery.
GDP By Expenditure
The Gross Domestic Product (GDP) can be derived as the value of all goods and services available for final uses and export. GDP at market prices includes net taxes on products; taxes are subtracted to obtain basic price GDP.
The expenditure approach measures the final uses of the produced output as the sum of Final consumption, Gross Capital Formation, and Exports fewer Imports, which are considered in turn in this report. Consumption of fixed capital—a measure of depreciation of assets—comprises the difference between Gross Domestic Product (GDP) and Net Domestic Product (NDP) and is also considered in this report.
Basic price GDP grew in real terms by 0.82% year-on-year in 2017. This was a significant improvement compared to a decline of -1.58% decline in real GDP growth rate in 2016.
Household Final Consumption
Household final consumption in 2017 fell by -0.99% from 2016 in real terms, although it increased by 9.77% nominally. The decline in real household consumption was an improvement on the –5.71% recorded in 2016. Weak household consumption growth indicates weak recovery of the domestic economy, while the nominal growth reflects the increase in prices over the year of 2017. This component accounted for 58.93% of real GDP in 2017.
In the first two quarters of 2017, real household final consumption recorded both year-on-year and quarter-on-quarter growth. However, consumption declined sharply in the third quarter (-11.88%) in real terms on a year-on-year basis. The positive growth in consumption in the last quarter of 2017 was not enough to offset the decline in the third quarter.
General Government
In the review year, general government expenditure accounted for 4.11% of gross domestic product (expenditure) in real terms, split between individual and collective consumption each of which accounted for 1.58% and 2.53% of GDP respectively.
Real government expenditure in 2017 fell by -7.99% over the preceding year, mainly caused by the decline in collective government consumption (a 10.41% decline rate in real terms). This was slower growth when compared to double-digit growth recorded in 2016 (23.42% year on year) Real individual governmental expenditure in the first quarter recorded a year-on-year growth of 14.69%. However, both individual and collective governmental consumptions in the following three quarters declined on a year-on-year basis.
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