Nigeria’s GDP slows to 2.25% in Q3 as inflation soars, oil output falls

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BY BAMIDELE FAMOOFO

Uba Group

According to the National Bureau of Statistics, Nigeria’s Gross Domestic Product grew by 2.25 percent (year-on-year) in real terms in the third quarter of 2022.

This growth rate declined from 4.03 percent in the third quarter of 2021. The reduction in growth is attributable to the base effects of the recession and the challenging economic conditions that have impeded productive activities.

The Q3 2022 growth rate decreased by 1.78 percent points from the 4.03 percent growth rate recorded in Q3 2021 and decreased by 1.29 percent points relative to 3.54 percent in Q2 2022.

However, quarter-on-quarter, real GDP grew at 9.68 percent in Q3 2022, reflecting a higher economic activity in Q3 2022 than the preceding quarter. In the quarter under review, aggregate GDP stood at N52, 255,809.62 million in nominal terms.

This performance is higher when compared to the third quarter of 2021 which recorded aggregate GDP of N45, 113,448.06 million, indicating a year-on-year nominal growth rate of 15.83 percent.

The nominal GDP growth rate in Q3 2022 was higher relative to the 15.41 percent growth recorded in the third quarter of 2021 and higher compared to the 15.03 percent growth recorded in the preceding quarter.

Parsing through the GDP breakdown, the oil sector remains in the contractionary territory, declining by 22.67 percent y/y as against -11.77 percent y/y in the second quarter of 2022.

According to the NBS, crude oil production averaged 1.20mb/d in Q3-22, 23.6 percent y/y lower than in Q3-21 (1.57mb/d). As a result, the oil sector contributed 5.66 percent to the total GDP (Q2-22: 6.33%) during the review period.

On the other hand, the non-oil sector maintained its positive growth path, albeit lower than the previous quarter, rising by 4.27 percent y/y in Q3-22 (Q2-22: +4.77% y/y). As a result, the non-oil sector contributed 94.34 percent to the total GDP (vs 93.67% in Q2-22).

Decomposing the GDP on a sectoral basis, Agriculture grew by 1.34 percent y/y (Q2-22: +1.20% y/y); Industries contracted by 8.00 percent y/y compared to a decline of 2.30 percent y/y in Q2-22; while Services grew by 7.01 percent y/y (Q2-22: +6.70% y/y).

In terms of contribution, services, agriculture, and industries, respectively, accounted for 51.96 percent, 29.67 percent, and 18.37 percent of overall output growth.

Four sub-activities make up the Agricultural sector: Crop Production, Livestock, Forestry and Fishing.

The sector grew by 20.07 percent year-on-year in nominal terms in Q3 2022, showing an increase of 12.13 percent points from the same quarter of 2021. Looking at the preceding quarter’s growth rate of 13.83 percent, there was an increase of 6.24 percent points. Crop Production remained the major driver of the sector. This is evident as it accounts for 91.98 percent of the overall nominal growth of the sector in the third quarter of 2022.

Quarter-on-Quarter growth stood at 46.07 percent in the third quarter of 2022. Agriculture contributed 27.55 percent to nominal GDP in the third quarter of 2022. This figure was higher than the rate recorded for the third quarter of 2021 and higher than the second quarter of 2022 which recorded 26.57 percent and 21.90 percent respectively.

The agricultural sector in the third quarter of 2022 grew by 1.34 percent (year-on-year) in real terms, an increase of 0.12 percent points from the corresponding period of 2021, and an increase of 0.14 percent points from the preceding quarter which recorded a growth rate of 1.20 percent. It grew on a quarter-on-quarter basis at 40.02 percent.

However, the sector contributed 29.67 percent to overall GDP in real terms in Q3 2022, lower than the contribution in the third quarter of 2021 and higher than the second quarter of 2022 which stood at 29.94 percent and 23.24 percent respectively.

The Manufacturing sector is comprised of thirteen activities: Oil Refining; Cement; Food, Beverages and Tobacco; Textile, Apparel, and Footwear; Wood and Wood products; Pulp Paper and Paper products; Chemical and Pharmaceutical products; Non-metallic Products, Plastic and Rubber products; Electrical and Electronic; Basic Metal and Iron and Steel; Motor Vehicles and Assembly; and Other Manufacturing.

“CBN"

Nominal GDP growth of the Manufacturing sector in the third quarter of 2022 was recorded at 2.20 percent (year-on-year), 30.53 percent points lower than the figure recorded in the corresponding period of 2021 (32.73%) and 3.01 percent points lower than the preceding quarter figure of 5.21 percent. Quarter-on-Quarter, growth of the sector was recorded at 23.15 percent during the quarter.

The contribution of Manufacturing to Nominal GDP in the third quarter of 2022 was 13.75 percent, lower than the figure recorded in the corresponding period of 2021 at 15.59 percent and higher than the second quarter of 2022 at 12.97 percent.

Real GDP growth in the manufacturing sector in the third quarter of 2022 was -1.91 percent (year-on-year), lower than the same quarter of 2021 and lower than the preceding quarter by 6.20 percent points and 4.91 percent points respectively.

The growth rate of the sector on a quarter-on-quarter basis stood at 8.95 percent. The Real contribution to GDP in the 2022 third quarter was 8.59 percent, lower than the 8.96 percent recorded in the third quarter of 2021 and lower than the 8.65 percent recorded in the second quarter of 2022.