Q3’19 GDP: Nigeria economy grew by 2.28% despite weak expansion in oil sector

Q3’19 GDP: Nigeria economy grew by 2.28% despite weak expansion in oil sector

Must Read

Lagos State Government bans Okadas, Tricyles, including Opay, Gokada

…Restricts Their Operations On 50 Highways, Bridges Lagos State Government on Monday wielded the big stick against the menace of...

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -
- Advertisement -

A major development that caught our attention this week is the report of the Q3’19 GDP performance published by the Nigerian National Bureau of Statistics (NBS) earlier on Friday. Contrary to our projection of a 2.05% y/y growth and most analyst consensus of 2.10% y/y, Nigeria’s GDP growth in Q3 printed at 2.28% y/y as against 2.12% y/y (revised) in Q2’19 and 1.81% in the corresponding period of 2018. In nominal terms, this translates to a real GDP size of N18.70 trillion as against N17.05 trillion in Q2’19 and N18.31trillion in Q3’18.

Q3’19 GDP: Nigeria economy grew by 2.28% despite weak expansion in oil sector

Probing into the data critically, our analysis revealed that the GDP rally was mainly driven by the non-oil sector, while the oil sector performance came in dismally. The non-oil GDP growth came in at 1.85%y/y as against 1.64%y/y in the previous quarter and 2.32%y/y in the corresponding period of 2018. This was impacted by improved growth in two of the three non-oil sub-sectors – Agriculture (which printed at 2.28% vs 1.79% in Q2’19) and Industries (which printed at 3.21% vs 2.84% in Q2’19), save for Services sector which recorded weak expansion of 1.87% as against 1.94% in the previous quarter.

Read:  Nigeria’s Capital Importation Rises to $6,303.63 Million in Q1, 2018; Ogun, Bauchi, & Kano Witnessed Strong Growth in foreign capital inflow - NBS

Q3’19 GDP: Nigeria economy grew by 2.28% despite weak expansion in oil sector
Sources: NBS, GTI Research

In addition, we noticed expansion in major non-oil sub-sectors such as Road Transport (20.18% as against 8.21% in Q2’19), Coal Mining (32.19% from 7.63% in Q2’19), Cement (6.87% as against 1.58% in Q2’19), Agriculture (2.28% from 1.79% in Q2’19), and Air Transport (15.23% against 12.31% in Q2’19). These could be attributed to accelerated commercial activities ahead of end of the year festive period and religious pilgrimage exercise (Road and Air Transport), improved government monitoring of the natural resources sector (Coal Mining), release of over N600bn by the federal government for capital projects (Cement) and the joint effect of the harvest season and land borders closure which positively impacted the patronizing of homegrown food items (Agriculture).

Read:  NIGERIANS PAID LESS FOR KEROSENE IN JUNE – NBS

Q3’19 GDP: Nigeria economy grew by 2.28% despite weak expansion in oil sector
Source: NBS, GTI Research

It is worthy to also note that the Financial & Insurance sub-sector of the Services industry grew by 1.07% as against a contraction of -2.24% in Q2’19. This could be attributed to improved growth of the Financial Institutions (0.61% as against a contraction of -3.52% in Q2’19) on the back of various reforms by the apex regulator (CBN) to increase cash flow to the real sector.

Read:  Procter & Gamble Empowers Women Entrepreneurs in Nigeria (Photos)

On the other hand, the expansion of the oil component of the GDP came in low at 6.49% y/y, as against 7.17% y/y in Q2’19, but much better than the contraction of -2.91% in the corresponding period of 2018. This could be attributed to the sustained decline in global crude oil demand amid weak growth, triggered by the Sino – U.S. trade tension and other regional concerns.

As such, the fall in the average price of Nigeria’s crude oil grade (Bonny Light) to $61.11 (from $66.77 in Q2) weigh on revenue generated, despite the increase in production from 5.36mbpd in Q2’19 to 5.53mbpd in Q3’19.

We expect the release of more funds for capital budget implementation, continued monetary and fiscal sector reforms, and characteristic high end of the year demand to drive stronger growth in Q4. As such, we projected a 2.40% growth in Q4’19.

GTI Research

- Advertisement -

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

Stanbic IBTC Holdings Plc FY’19 – Trading gains keep earnings afloat

CardinalStone Research Stanbic IBTC Holdings Plc (STANBIC: TP 47.14 - HOLD) released unaudited FY’19 results, which revealed relatively flat earnings...

Nigerian Insurance In 2020: Mergers & Acquisitions

The National Insurance Commission (NAICOM) anticipates several M&A transactions in Nigeria in 2020. No lesser than six insurance companies have notified the regulator of...

Road accidents statistics worldwide: a 2019’s report on mortality rate per country

In terms of road safety, Africa is not the example to follow. According to the WHO report, the continent registered a road-traffic mortality rate...

Total Nigeria Plc FY’19 – Earnings weakness subsists despite asset disposal gain

Total Nigeria Plc (TOTAL) released a FY’19 unaudited result that revealed a 69.6% YoY plunge in profit after tax to N2.4 billion despite a...

More Articles Like This