March 11, 2020

Nigeria Economic Update (Issue 8)

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.

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