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
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.
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.
HEADLINES YOU MIGHT HAVE MISSED FROM BRAND SPUR
The Nigerian National Oil Organization (NNPC), on Sunday, said it made a sum of $4.60billion from raw petroleum and gas sent out between June 2019 and 2020.
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Nigeria’s Gross Domestic Product (GDP) decreased by -6.10% year-on-year) in real terms in the second quarter of 2020, ending the 3-year trend of low but positive real growth rates recorded since the 2016/17 recession.
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