Nigeria’s real GDP tumbles 6.1% in Q2-2020

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Nigeria’s real GDP tumbles 6.1% in Q2-2020 - Brand Spur

Earlier the National Bureau of Statistics (NBS) published the highly anticipated Q2-2020 GDP numbers. Unsurprisingly, economic activities contracted in Q2-2020. According to the report, real GDP declined by 6.1% y/y (significantly more than our estimate), representing the steepest economic decline in Nigeria in over three decades. Clearly, this is attributed to the negative impact of the COVID-19 pandemic and the global lockdown measures on the various sectors of the economy. Notably, of the 19 sectors in the NBS’s classification, 13 recorded contraction while 6 sectors recorded expansion. The bright spots included Financial Services, Telecoms, Coal Mining, Utilities, and Agric. Specifically, the Financial Institution and Telecommunication sectors were stand-out performers with 28.4% and 18.1% expansion, respectively. Clearly, credit growth amid CBN’s LDR policy, FX  revaluation gains, increased digital adoption and strategic positioning of these sectors supported their performance. On the contrary, Oil Refining, Road, Air, Rail & Pipelines Transports, Accommodation & Food Services, as well as Construction were the worst hit with over 30.0% contraction each or -52.0% on average.


Oil GDP: Hit on all side in Q2-2020


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As expected, the Nigerian Oil sector steeply contracted by -6.6% y/y in real terms in Q2- 2020 (vs. +7.2% and +5.1% in Q2-2019 and Q1-2020 respectively). Notably, the y/y contraction was fueled by a 12.6% y/y decline in oil production to 1.81mbpd in Q2-2020 (the lowest level since Q1-2017) amid the country’s compliance to OPEC+ output quota during the period. In terms of contribution to overall GDP, the oil sector contribution slid to 8.9%, (vs 9.0% and 9,5% in Q2-2019and Q1-2020 respectively).

Non-Oil GDP: A broad-based contraction


The non-oil real GDP contracted for the first time since Q3-2017 by -6.1% in Q2-2020 (vs.

+1.6% in Q2-2019 and Q1-2020, respectively. This was on the back of slow growth in the Agriculture sector which grew 1.58% (vs 1.79% in Q2-2019 and 2.20% in Q1-2020), coupled with contraction in Services sector, -6.78% in Q2-2020 (vs 1.94% in Q2-2019 and 1.57% in Q1- 2020) and the Industrial sector, down 12.05% (vs 2.84% in Q2-2019 and 2.26% in Q1-2020). However, there were a few bright spots within the non-oil sector. Notably, the Financial Services and the ICT sector which contributed a total of 22.0% to real GDP jumped by

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Nigeria’s real GDP tumbles 6.1% in Q2-2020 - Brand Spur
Sources: National Bureau of Statistics, United Capital Research

28.4% and 18.1% respectively in Q2-2020. Overall, 13 sub-sectors within the non-oil GDP classification grew while 32 contracted.

Agric GDP: Inter-state restrictions and planting season left an underwhelming imprint


Agriculture sector GDP slowed to 1.58% in Q2-2020 y/y as restriction in movements coupled with extension of planting season into Q2-2020 left an underwhelming imprint on the sector. This is a slowdown relative to the 1.8% and 2.2% recorded in Q2-2019 and Q1-2020, respectively. Specifically, Crop Production which accounts for above 85.0% of the sector’s GDP was marginally up by 1.4% (vs. 1.9% and 2.4% in Q2-2019 and Q1-2020, respectively). Similarly, growth in the Forestry sub-sector slowed to 1.1% y/y in Q2-2020 (vs 3.2% and 1.7% y/y in Q2-2019 and Q1-2020, respectively). Meanwhile, the Livestock sub-sector – the second largest contributor to Agric. GDP (at c. 7-8%) saw a faster growth of +2.26% (vs – 0.1% and +0.6% in Q2-2019 and Q1-2020, respectively). Also, Fishery sub-sector recorded a faster growth of 5.68% (vs 1.1% and 1.5% in Q2-2019 and Q1-2020, respectively).

Read Also:  Nigeria's GDP Grew By 1.87% in Q1 2020 amid global challenges

Manufacturing Sector: 11 of 13 sub-sectors contracts in Q2-2020

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The manufacturing sector was one of the worst hit sectors in Q2-2020, declining 8.78%y/y. Analysing the component of the subsector showed that only 2 out of the 13 sub sectors recorded growth. Specifically, the Chemical and Pharmaceutical sub-sector (+3.8% y/y) posted its fastest growth in more than three years in Q2-2020. This is unsurprising considering the intervention fund channeled towards the pharmaceutical companies as well as the increased demand for pharmaceutical products in the wake of COVID-19 pandemic. Similarly, the Motor Vehicles and Assembly sub-sector was up 6.95% y/y (vs 1.04% y/y in Q1- 2020). Meanwhile, the Oil Refining (-67.66% y/y), Electrical and Electronics (-28.41% y/y),


Pulp Paper and Paper Products (-28.16%) as well as Non-metallic Products ( -22.78% y/y) recorded the sharpest decline within the sector. Overall, the manufacturing sector contributed 8.82% to aggregate GDP in Q2-2020, down 83bps compared to Q1-2020.

Outlook: Q2-2020 is as worst as it gets for 2020


For the rest of the year, we believe the sharp contraction recorded in Q2-2020 is as worst as it can get for the year as the government continues to phase-out lockdown measures implemented to curb the spread of COVID-19 within the country. However, we expect economic performance to remain contractionary through H2-2020 as business activities continue to struggle to return to their pre-COVID-19 levels. This signals that recession will kick in fully by Q3-2020E, as key sectors such as Oil & Gas, Trade, Agric, Aviation, other Manufacturing & Services, accounting for over 50% of real GDP, may not rebound fully by end of September 2020.

Specifically, we expect Nigeria’s compliance to OPEC+ production cut agreement (capped at 1.50mbpd from August-2020 to Dec-2020) and compensation for prior months overproduction with deeper cut to limit production to below pre-COVID-19 levels of above 2.0mbpd. Hence, oil sector GDP is expected to remain pressured. Also, contrary to our initial optimistic position for the non-oil sector to recover by Q4-2020, we now assume the sector will remain contractionary through Q3 and Q4-2020E. This assumption is predicated on the negative impact of the current FX scarcity, pressure on consumer spending amid rising inflation and unemployment rates, would continue to have on volumes growth. Thus, offsetting the anticipated gains from easing economic restrictions and liquidity injections from both the monetary and fiscal sides. However, we believe sectors such as the ICT, Agriculture, and Financial Services, which contribute c. 45.0% to real GDP, will continue to stay resilient during the dark times in Q3 and Q4-2020.

Adjusting our model estimates for all the above, we have further lowered our real GDP growth forecast for FY-2020E from -2.69% to between -2.95% and -3.14%. The biggest downside risk to this projection remains the coronavirus related worries, especially if  the virus continues to spread rapidly in the rest of the world as this may continue to hurt oil prices. Thus, this might delay the possibility of an early recovery or a V-shape recovery to a more strenuous U-shape or W-shape recovery.

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Nigeria’s real GDP tumbles 6.1% in Q2-2020 - Brand SpurNigeria’s real GDP tumbles 6.1% in Q2-2020 - Brand Spur

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Nigeria’s real GDP tumbles 6.1% in Q2-2020 - Brand SpurNigeria’s real GDP tumbles 6.1% in Q2-2020 - Brand Spur

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The Boutique Hotel Under Gudou Holdings Co., Ltd. Further Expands to Panyu District, Guangzhou— Guangzhou Gudou Quanfeng Residence Officially Opens on 10 February 2021

HONG KONG SAR - Media OutReach - 25 February 2021 - Gudou Holdings Limited ("Gudou Holdings" or "Company", which together with its subsidiaries, is referred to as the "Group", SEHK stock code: 8308), is pleased to announce that Guangzhou Gudou Quanfeng Residence, the Group's first boutique hotel project in Panyu District, Guangzhou City, has officially opened on 10 February 2021.

Guangzhou Gudou Quanfeng Residence has 33 guest rooms, including 2 two-bedroom suites and 3 three-bedroom suites. The design is modelled on one of the ancient Lingnan (southern Chinese) architectural style, "Guanyindou", which features the shape of two handles of a wok on either sides of the roof of a building in the ancient town of Shawan, Panyu. Carrying on the tradition of the "Gudou" brand, the hotel organizes one-stop leisure and entertainment activities and are installed with comprehensive facilities to provide a new experience for tourists who prefer to enjoy the finer things in life in the traditional ambience.

Guangzhou Gudou Quanfeng Residence is conveniently located in the Hills Ecool Creative Park in Panyu, which occupies a total site area of​​340,000 square meters at the southern tip of Panyu District. The hotel is easily accessible by a developed network of roads around the Hills, including South China Expressway, Xinguang Express, Nansha Port Express and other highways. Therefore, it is easy to travel from the hotel to Zhujiang New Town in Guangzhou, and thus elsewhere in the Pearl River Delta. It takes five minutes to reach the Chimelong Paradise, and the Blessing Colorful World within easy reach. The Clifford Station on Metro Line 21 will also be opened in 2021 and it is only an about 10-minute walk from the hotel. In the Panyu Golden Valley Eko Creative Park, a head office for environmental operation of business and a district for shopping and leisure will be built. Such plan has earned the park a reputation as "China's Number One Low-Carbon Community". The rising occupancy rates of the office buildings in Panyu will also mean an increase in business travelers who, in turn, can drive up the occupancy rates of the hotel and the spending there.

There are many well-known tourist attractions near Guangzhou Gudou Quanfeng Residence, including Chimelong Paradise, Blessing Colorful World, Dafu Mountain Forest Park, Lianhua Mountain Tourist Area, Shawan Ancient Town and IKEA Store, which is popular with young people. The Evergrande Football Stadium, which can seat 100,000 spectators, is also expected to be completed in 2022 and will be able to accommodate tourists who stay in Guangzhou for two days and one night.

Mr. HON Chi Ming, Chairman, Chief Executive Officer and Executive Director of the Group, said, "The Group is very satisfied and encouraged by the opening of the Guangzhou Gudou Quanfeng Residence. The hotel is conveniently located in an area where there are comprehensive facilities. Therefore, the area is expected to attract a large number of tourists. Since the apartment hotel has already been renovated and equipped with upgraded facilities and soft furnishings, not much more capital will be required for putting the hotel in operation in a short time. This means cost-effectiveness at the hotel and can quickly responding to the trend of tourism recovery. Looking ahead, tourism property development will remain the focus of the Group's business development. Specifically, we will actively expand our tourism property business in Guangdong Province, provide more quality services to meet customer needs, and increase investors' awareness of Gudou Holdings' brand. All this is aimed at creating better returns."

About Gudou Holdings Limited

Gudou Holdings is a hot spring resort and hotel operator and a tourism property developer in the People's Republic of China ("PRC"). It principally engages in (i) the operation and management of the hot spring resort and hotel facilities of Gudou Hot Spring Resort, which is a national AAAA-level tourist area, and provision of consultancy and/or management services; and (ii) the development and sale of tourism properties in Guangdong Province. The "Gudou" brand is a well-known brand of integrated hot spring resort in the PRC. Gudou Holdings operates six theme hotels, among which Royal SPA Hotel was rated as a five-star hot spring by the National Hot Spring Tourism Enterprise Star Rating Committee in 2020. The resort complexes with a variety of leisure and recreational facilities, including hot spring facilities, hotels, commercial stores, food and beverages outlets, recreational waterpark, a spa centre, a conference centre, parks, tourist attractions and other ancillary leisure and recreational facilities. The Group's newly established Guangdong Gudou Quanfeng Cultural Tourism Development Co., Ltd. has further expanded its presence to Guangzhou with the official opening of Guangzhou Gudou Quanfeng Residence on 10 February 2021, marking the latest headway following the official operation commencement of Gudou Spring Superior Hotel, located in the center of Jiangmen on 15 January 2021.

Nigeria’s real GDP tumbles 6.1% in Q2-2020 - Brand Spur
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