In line with our expectation, Nigeria’s real Gross Domestic Product grew year-on-year (y-o-y) by 2.55% to N19.53 trillion in Q4 2019, faster than 2.28% growth registered in Q3 2019.
The Non-oil sector, accounting for 92.68% of total GDP, was the main driver of growth has climbed 2.26% to N18.10 trillion in Q4 2019 (faster than +1.85% in Q3 2019). The agricultural sector, which accounted for 26.09% of total GDP, grew y-o-y by 2.31% in Q4 2019, faster than 2.28% in Q3 2019. The trade sector share of real GDP in the review quarter was 15.99% (higher than 15.23%
in Q3, 2019, but lower than 16.50% in Q4 2018). The sector recorded a decline of 0.51%, howbeit, slower than 1.45%. The information and communication sector contribution to real GDP increased to 13.12% in Q4 2019 (from 11.34% in Q3 2019 and 12.40% in Q4 2018). However, its growth rate slowed to 8.50% in Q4 2019 (from 9.88% in the preceding quarter and 13.20% in the corresponding quarter of 2018).
Remarkably, the financial services sector spiked by 20.18% even as it accounted for 3.19% of real GDP. The oil & gas sector also grew y-o-y by 6.39%, albeit slower than 6.49% recorded in Q3 2019 – the sector actually recorded a quarterly plunge of – 20.87% amid lower crude oil production volumes and international crude oil prices. In FY 2019, Non-oil sector grew y-o-y by 2.06% to N65.12 trillion (or USD433.25 billion at 2010 exchange rate), while Oil & gas sector grew y-o-y by N6.27 trillion (or USD41.72 billion); hence, full-year 2019 real GDP grew by 2.27% to N71.39 trillion (or about USD475.97 billion) – a little shy of IMF’s 2.30% growth estimate for 2019.
In other climes, the United States real GDP increased quarter-on-quarter by 2.1% in Q4 2019 (according to a “second” estimate), unchanged from Q3 2019 growth rate and the “advance” estimate for Q1 2019. However, on a y-o-y basis, real GDP grew by 2.3%. The quarterly increase in Q4 real GDP reflected positive contributions from personal consumption expenditures (PCE), federal government spending, exports, residential fixed investment, and state and local government spending that were partly offset by negative contributions from private inventory investment and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased. Real GDP increased 2.3% in 2019 (from the 2018 annual level to the 2019 annual level), compared with an increase of 2.9% in 2018.
The increase in real GDP in 2019 reflected positive contributions from PCE, non-residential fixed investment, federal government spending, state and local government spending, and private inventory investment that were partly offset by a negative contribution from residential fixed investment.
We welcome the increased diversification of the Nigerian economy due to the need to enhance fiscal revenue as well as the general wellbeing of citizens. The agricultural sector appears to be steadily growing in an increase in output amid increased government interventions while the burgeoning ICT sector continues to thrive as its relevance to other sectors is increasingly palpable. We, however, opined that Nigeria’s Q1 2020 real GDP may be negatively impacted by external shocks, especially from the expected weakness in global consumption as the world battles to contain COVID-19 virus. Currently, global crude oil prices, a major determinant of Federal Government’s revenues, have been on the declining trend owing to the global pandemic – Nigeria’s Bonny Light grade has shed 22.34% year-to-date and closed at USD5236 a barrel as at Thursday, February 27, 2020. Expansion in manufacturing and non-manufacturing activities slowed further in February with respective PMIs of 58.3 (from 59.2) and 58.6 (from 59.2) to suggest sluggish growth for Q1 2020. We expect the early implementation of the 2020 budget, especially spending on critical social infrastructure, as well as an anticipated increase in household consumption occasioned by the adoption of the N30,000 new minimum wage, to provide some support to growth in 2020.