Q2 2020 Real GDP Shrinks by 6.10% as Oil & Gas, Trade Sectors Contract amid COVID-19 Pandemic

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In line with our expectation, Nigeria’s real Gross Domestic Product (GDP) contracted year-on-year (y-o-y) by 6.10% to N15.90 trillion in Q2 2020, down from a 1.87% growth registered in Q1 2020 – amid the negative impact of COVID-19 pandemic which compelled the government to restrict movements, especially in April 2020.

The non-oil sector shrank y-o-y by 6.05% (and contracted by 4.43% quarter-on-quarter) to N14.48 trillion – this was chiefly due to the 31.77%, 21.99% and 16.59% contraction witnessed in Construction, Real Estate and Trade sectors to N0.51trillion, N0.85 trillion and N2.27 trillion respectively (which jointly accounted for 22.85% of GDP).

Y-o-Y Real GDP Growth Rates

Q2 2020 Real GDP Shrinks by 6.10% as Oil & Gas, Trade Sectors Contract amid COVID-19 Pandemic.
Source: National Bureau of Statistics, Cowry Research
Growth Rates: Year-on-Year

Despite the negative impact of COVID-19 on the local economy, financial services, information & communications and agricultural sectors, which jointly accounted for 46.48% of total GDP, all grew yo-y by 18.49%, 15.09% and 1.58% respectively in Q2 2020. The growths printed by info. & comm. and financial services sectors were due to the heavy reliance on technology by most companies and individuals to carry out their operations.

Q2 2020 Real GDP Shrinks by 6.10% as Oil & Gas, Trade Sectors Contract amid COVID-19 Pandemic.
Source: National Bureau of Statistics, Cowry Research
Growth Rates: Year-on-Year

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Q2 2020 Real GDP Shrinks by 6.10% as Oil & Gas, Trade Sectors Contract amid COVID-19 Pandemic.
Source: National Bureau of Statistics, Cowry Research
Growth Rates: Year-on-Year

The oil & gas sector which moderated y-o-y by 6.63%, from a 5.06% growth recorded in Q1 2020, was on the back of a 10.40% q-o-q decline in Nigeria’s crude oil output to 1.81mbpd. Also, Bonny light price tanked q-o-q by 42.32% to USD29.88 per barrel in Q2 2020.

Given the ease in lockdown, which began from the month of May 2020, coupled with the sustained rise in crude oil prices, we expect a slower GDP contraction rate in Q3 2020; hence, the local economy may slide into recession in Q3 2020. However, with the numerous stimulus packages, we expect Nigeria to be out of recession in 2021.

 

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Nigeria’s GDP Shrinks by 6.10% in Q2 2020 – NBS

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Q2 2020 Real GDP Shrinks by 6.10% as Oil & Gas, Trade Sectors Contract amid COVID-19 Pandemic - Brand SpurQ2 2020 Real GDP Shrinks by 6.10% as Oil & Gas, Trade Sectors Contract amid COVID-19 Pandemic - Brand Spur

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Q2 2020 Real GDP Shrinks by 6.10% as Oil & Gas, Trade Sectors Contract amid COVID-19 Pandemic - Brand SpurQ2 2020 Real GDP Shrinks by 6.10% as Oil & Gas, Trade Sectors Contract amid COVID-19 Pandemic - Brand Spur

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