Nigeria Economy Slides into Recession; Albeit, Q3 2020 Real GDP Contraction Rate Eases to 3.62%…

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In line with our expectation, Nigeria’s economy went into recession as it printed two consecutive quarters of negative growth rates.

Specifically, the country’s real Gross Domestic Product (GDP) contracted y-o-y by 3.62% to N17.82 trillion in Q3 2020, albeit better than a 6.10% contraction printed in Q2 2020 – economic activities relatively improved in the quarter under review given the further ease in lockdown as number of COVID-19 discharged cases increased.

Y-o-Y Real GDP Growth Rates

Nigeria Economy Slides into Recession; Albeit, Q3 2020 Real GDP Contraction Rate Eases to 3.62% Brandspurng…
Nigeria Economy Slides into Recession; Albeit, Q3 2020 Real GDP Contraction Rate Eases to 3.62% | Source: National Bureau of Statistics, Cowry Research

Financial Services, Information & Communications and Agricultural sectors, which jointly accounted for 46.91% of total GDP, all grew y-o-y by 3.21%, 14.56% and 1.39% respectively in Q3 2020. Information & Communications and Financial Services sectors had continued to benefit from “new normal” as most companies and individuals were heavily reliant on technology.

Nigeria Economy Slides into Recession; Albeit, Q3 2020 Real GDP Contraction Rate Eases to 3.62% Brandspurng1…
Source: National Bureau of Statistics, Cowry Research

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The non-oil sector shrank y-o-y by 2.51% but grew by 12.36% q-o-q to N16.27 trillion. The strong quarterly growth in the non-oil sector was largely due to improvements witnessed in the Agricultural, Trade and Manufacturing sectors as they registered quarterly growth rates of +39.95% in Q3 (from +6.57% in Q2), +9.01% in Q3 (from -15.68% in Q2 ), and +9.01% in Q3 (from -15.68% in Q2).

Read Also:  Nigeria's Domestic Debt Service increased by 295% in Q1 2020 - NBS

Nigeria Economy Slides into Recession; Albeit, Q3 2020 Real GDP Contraction Rate Eases to 3.62% Brandspurng2…
Source: National Bureau of Statistics, Cowry Research

The oil & gas sector fell y-o-y by 13.89%, from a 6.63% contraction printed in Q2 2020; albeit, it grew q-o-q by 9.64% amid a significant rise in the price of Bonny light in Q3 2020. Quarterly average crude oil price rose to USD43.28 per barrel in Q3 (from USD29.88 in Q2 2020); albeit crude oil output fell by 23.13% to 1.47mbpd.

We expect Nigeria’s economy to have a V-shape recovery from this recession amid the development of a vaccine for COVID-19 virus, stable crude oil prices and the numerous stimulus packages. However, we note that the recovery may be slowed by the aftermath of the EndSARS protest and rising inflation rate.

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Nigeria Economy Slides into Recession; Albeit, Q3 2020 Real GDP Contraction Rate Eases to 3.62%… - Brand SpurNigeria Economy Slides into Recession; Albeit, Q3 2020 Real GDP Contraction Rate Eases to 3.62%… - Brand Spur

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Nigeria Economy Slides into Recession; Albeit, Q3 2020 Real GDP Contraction Rate Eases to 3.62%… - Brand SpurNigeria Economy Slides into Recession; Albeit, Q3 2020 Real GDP Contraction Rate Eases to 3.62%… - Brand Spur

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