August 3, 2015
Volume 1 January 2015
OPEC weekly basket price declined by 2.4 percent to $42.68/barrel on September 16, 2016. This was triggered by a rise in US oil reserve, amid an outlook on weak global oil demand. Similarly, provisional data by OPEC reveals a steady decline in Nigerias crude oil production. Notably, production declined by 3.4 percent to 1.47 mbd in August, 2016.
Recent Data on Nigerias Real GDP growth rate (Year-on-Year) declined by 2.47 percentage points, from 2.11 per cent in 2015Q4 to -0.36 percent in 2016Q11. This is the lowest GDP growth rate since 2004Q2 (-0.81 percent). The Oil sector continued to contract, as -1.89 percent growth was recorded in 2016Q1. The negative growth witnessed in the oil sector was likely driven by the fall in global oil prices by $9.732 and decline in domestic crude oil production, relative to preceding quarter. Similarly, the Non-oil sector witnessed a negative growth as it declined by 3.32 percentage points from 3.14 percent in 2015 Q4 to -0.18 percent in 2016Q1. The underperformance in the non-oil sector was driven by significant contractions in financial (by 17.69 percent), manufacturing (by 8.77 percent), and real estate (by 5.48 percent) sub-sectors. Given that the present economic fundamentals point to a likely recession in 2016Q2, the government can stir economic activities by speeding up the budget implementation process to spur growth in the non-oil sector and the economy at large. More so, the domestic production shock in the oil sector needs to be addressed to effectively leverage on the present marginal rise in crude oil prices.