The National Bureau of Statistics (NBS) has reported that the GDP growth rate in Q42019 is 2.55% which is relatively higher than Q32019 GDP growth rate at 2.28% and remains the highest quarter on quarter growth since the 2016 recession1. This cumulates to an annual growth rate of 2.27% for 2019. Furthermore, the aggregate GDP for Q42019 stood at N39.5 trillion compared to the aggregate GDP of Q32019 at N37.8 trillion and the corresponding quarter in 2018 at N35.2 trillion. While the non-oil sector shrunk year on year by 0.44%, it contributed 92.68% to Q42019 GDP which is significantly higher than the oil sector’s contribution at 8.78%. As the price of Brent crude oil falls below the US$57 per barrel benchmark in the 2020 budget, this threatens the realism of the budget, thus leading to a slowdown in economic activities. In order to achieve sustainable and significant economic growth, the country’s revenue base should be de-linked from oil, and recurrent expenditure in the form of cost of governance should be cut down. This will allow for the increased revenue to be diverted to key sectors including manufacturing and mining sectors.
March 11, 2020
Nigeria Economic Update (Issue 8)
Related
Nigeria Economic Update (Issue 48)
Crude
oil price decreased in the review week. OPEC weekly basket price reduced by 3.5
percent to $42.06per barrel from November 4, 2016 to November 11,
2016, while Nigerias bonny light price decreased by 1.1 percent to $44.36per barrel in the same period. Global oil market refocused on oversupply, as
indicated in the OPECs October crude data figures (global OPEC and Non-OPEC
oil supply grew by 0.97mb/day to average 96.32mb/day and outpaced demand by
1.92mb/day).
Nigeria Economic Update (Issue 24)
The external reserves decreased week-on-week marginally by 0.2 percent from June 9, 2017 to June 16, 2017. The reserve declined from $30.27 billion to $30.21 billion. Given that crude oil revenue constitutes the most part of the reserve, the decline may be reflective of the week-on-week drop in global crude oil price (Crude oil price fell by approximately 2 percent to $47.377 per barrel as at June 16 2017). The ongoing forex intervention by the monetary authority also poses a challenge to foreign reserve conservation. Given the unimpressive performance of global oil prices in recent time, there is need to explore other areas with great potentials to generate foreign exchange earnings. Diversification of forex earnings remains the key to insulating foreign reserve against fluctuations in global commodity prices. The country can tap into solid minerals sector as alternative source of foreign exchange. Huge investment together with investor-friendly policies in solid minerals would make the sector attractive to investors.