Nigeria Gross Domestic Product: Economy Extends Recovery by 2.27% y/y in FY’19

Must Read

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

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

Top 10 Most Expensive Universities In Nigeria

For many Nigerians, high-quality higher education is a luxury. There are many private universities who are known not only...

15 Wool Braid Hairstyles You Should Try

Wool braid hairstyles have been popular for years and show no signs of slowing down. Wool braids allow you...
Nigeria Gross Domestic Product: Economy Extends Recovery by 2.27% y/y in FY’19Nigeria Gross Domestic Product: Economy Extends Recovery by 2.27% y/y in FY’19

Recently released GDP data by the National Bureau of Statistics (NBS) shows that Nigeria’s FY’19 real GDP expanded to 2.27% y/y (FY’18: 1.91% y/y), outperforming Vetiva estimate of 2.19% y/y. Likewise, Q4’19 annual growth rate was higher – at 2.55% y/y – than both the Q3’19 growth rate (2.28% y/y) and Vetiva’s estimate of 2.38% y/y. On a quarterly basis, the growth in Q4’19 was consistent with the historical trend as it slowed to 5.59% q/q from 9.23% q/q in Q3’19.

Nigeria Gross Domestic Product: Economy Extends Recovery by 2.27% y/y in FY’19

The oil sector, which accounted for 8.78% of real output in FY’19 (FY’18: 8.59%) expanded by 4.59% y/y compared to an expansion of 0.97% y/y in FY’18. The performance of the oil sector was driven by a ten thousand barrel increase in average oil production to 2.01mbpd in 2019 from 1.91mbpd in 2018. Unlike the oil sector, growth in the non-oil sector remained sluggish at 2.06% y/y in FY’19 (FY’18: 2.00% y/y) as the agriculture (FY’19: 2.36% y/y), manufacturing (FY’19: 0.77% y/y) and construction (FY’19: 1.81%) sectors – which accounted for 38% of aggregate real output – recorded suboptimal growth through the year.

While the services sector – which accounted for 57.66% of non-oil sector output in FY’19 – recorded a faster growth pace of 2.22% y/y (FY’18: 1.83% y/y), its impact on the aggregate GDP was dampened by contractions in trade and real estate subsector.

- Advertisement -

Specifically, the trade sector – which constituted 16% of aggregate real output – contracted by 0.38% in FY’19 due largely to the implementation of import substitution policies. Similarly, the real estate sector – that constituted 11.63% of GDP in FY’19 –contracted further by 2.36% y/y. On the flip side, the telecommunications & information subsector – that contributed 10% to real output- was the highest contributor to GDP in the absolute term at ₦753.23 billion.

Tangible output extends recovery to 2.39% y/y

On the bright side, the recovery intangible output was led by the mining sector which recorded a growth rate of 4.43% y/y. The stellar performance of the oil sector – which accounted for 98.56% of the mining sector in FY’19- had an attendant impact on the performance of the mining sector. Tangible output expanded further in FY’19 to 2.39% y/y from 1.94% y/y in FY’18. The continued recovery intangible is supported by ongoing monetary and fiscal policy measures targeted at improving productivity in the sector.


The agriculture sector also recorded an improvement in output growth from 2.12% y/y in FY’18 to 2.36% y/y in FY’19. Target-lending by the central bank to players in the agriculture space has helped improve the sector’s productive capacity while the closure of the land-borders has encouraged agriculture players to increase output, resulting in a marginal increase in overall agriculture contribution to GDP. The agriculture sector contributed 25.16% to GDP in FY’19, compared to a contribution of 25.13% in FY’18. The performance of the agriculture sector still lags its 5-year average of 3.53% y/y.

- Advertisement -

The construction sector felt the impact of 2019 being an election year. The sector grew by 1.81% y/y in FY’19, underperforming its FY’18 growth of 2.33% y/y. In addition to delays in the passing of the budget, the delays associated with reconstituting the cabinet stalled the pace of implementing infrastructure projects and weighed on the overall performance of the construction sector. Capital expenditure in 2019 stood at 58%, higher than in 2018 (29%) when the budget was passed in June.

The manufacturing sector also underperformed its 2018 growth rate at 0.77% y/y (FY’18: 2.09% y/y). This was due largely to a not so impressive performance from the food, beverage & tobacco sub-sector (2.17% y/y) and a 0.09% contraction in the textile & apparel sub-sector. The slowdown in economic activities in Q1’19, occasioned by election disruptions weighed on the performance of the manufacturing subsector while the textiles subsector suffered from the absence of reforms to support the creation of a stable value chain. Both sub-sectors accounted for 68.08% of the manufacturing sector in FY’19.

Nigeria Gross Domestic Product: Economy Extends Recovery by 2.27% y/y in FY’19

Performance of selected sectors

- Advertisement -

The growth outlook remains tepid

For 2020, we expect the overall growth momentum to remain constrained due to the dearth of much-needed reforms to spur robust growth intangible output. The absence of these reforms will continue to stifle the inflow of Foreign Direct Investments to critical economic sectors. A case in point is the redrafting of the Petroleum Industry Governance Bill (PIGB) after over a decade of the impasse. The continued absence of the bill will weigh on the performance of the oil sector, especially as the outlook for oil prices remains downbeat. In addition, the outbreak of the coronavirus is expected to take a toll on the oil sector as well as the manufacturing and trade sectors. Besides the subduing impact of oil prices and the spillover effect on the oil and trade sectors, manufacturers who rely on imported raw materials from China will be constrained due to the extended shutdown of factories in China. Consequently, we expect growth in the oil sector to slow to 3.07% y/y in FY’20 from 4.59% y/y in FY’19. In addition to the impact of subdued oil prices, we do not envisage a shift in the government’s body language from import substitution therefore, we expect trade to contract for the fifth consecutive year (FY’20: -0.66%).

Read:  Feb-19 Inflation: Should we expect further easing?

For the manufacturing sector, we expect the impact of the extended closure of the land-borders, FX restriction for food imports and targeted lending to local manufacturers to cushion the impact of the coronavirus on the sector. This is because there is a ready local market to absorb expansion in the food sub-sector, which makes up 46% the sector. Hence, we expect an improvement in manufacturing sector growth (FY’20: 1.27% y/y) from 0.77% y/y in FY’19 as the sector continues to enjoy support from both fiscal and monetary policy measures. Just like the manufacturing sector, the agriculture sector will also benefit from both fiscal and monetary policy measures. As such, we expect the sector to expand further in FY’20 to 2.69% y/y from 2.36% in FY’19.

Finally, we expect growth in the construction sector to accelerate to 2.41% y/y in FY’20 (FY’19: 1.81% y/y), following the early passage of the 2020 Budget which should ensure a quick rollout of infrastructure projects. Overall, we expect marginal improvement intangible output in FY’20 (2.47% y/y) from 2.39% y/y in FY’19. Considering that the tangible output accounts for 46.85% of real GDP, we expect a 2.32% y/y growth in aggregate real output. This is because contractions in trade (FY’20: -0.66%) and real estate (FY’20: -3.77%) will weigh on the performance of the aggregate real GDP.

Read:  Feb-19 Inflation: Should we expect further easing?

Nigeria Gross Domestic Product: Economy Extends Recovery by 2.27% y/y in FY’19


- 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.


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

Mercedes-Benz delivers approximately 477,400 cars worldwide in Q1 2020

Britta Seeger: “Together with our global retail partners, we have further strengthened our online activities.” Despite the challenging...

African Development Bank Group unveils $10 billion Response Facility to curb COVID-19

The Facility is the latest measure taken by the Bank to respond to the pandemic and will be the institution's primary channel for its...

Defending competition in the markets during COVID-19

Under normal circumstances competition is needed in markets to keep prices low, but with the COVID-19 crisis wreaking havoc on markets the world over,...

Nigeria requests emergency IMF financing, but is it enough?

● Disbursement under the RFI could amount to up to US$3.3bn ● But this is not an IMF program, and the Nigeria authorities have ruled...

COVID-19: Laptops scarcity hits Europe as request floods Nigeria

The on-going COVID-19 crisis has sparked a spike in demand for laptops in Nigeria and Sub-Saharan Africa as Europe, the Middle East, and other...
- Advertisement -
BrandsPur Weekly Cartoons
%d bloggers like this: