The National Bureau of Statistics has released the Nigeria’s Gross Domestic Product (GDP) for the first quarter of 2018 showing a marginal rise in growth. The GDP had grown by 1.95 per cent year on year in real terms.
The growth is higher than 1.92 per cent that was recorded in the fourth quarter of 2017 and shows a stronger growth when compared with the first quarter of 2017 which recorded a growth of –0.91 per cent indicating an increase of 2.87 per cent points.
Compared with the preceding quarter, there was a decline of –0.16 percentage points from 2.11 per cent. Quarter on quarter, real GDP growth was –13.40 per cent. Aggregate GDP stood at N28.464 trillion in nominal terms. This performance is higher when compared to the first quarter of 2017 which recorded a nominal GDP aggregate of N26.028 trillion, presenting a positive year on year nominal growth rate of 9.36 per cent.
This rate of growth is however lower relative to growth recorded in Q1 2017 by -7.70 per cent points at 17.06 per cent but higher than the preceding quarter by 2.14 per cent points at 7.22 per cent. The services sector was the largest contributor to real GDP with 54.3 per cent followed by industries which contributed 24 per cent. The agriculture sector had in the first quarter of 2018 had contributed 21.65 per cent to real GDP.
Nominal GDP growth of Manufacturing in the first quarter of 2018 was recorded as 8.93 per cent year on year, 7.70 percentage points lower than 16.63 per cent recorded in the corresponding period of 2017 and 0.27 percentage points lower than the preceding quarter figure of 9.20 per cent.
Quarter on quarter growth of the sector is recorded at -1.04 per cent. The contribution of Manufacturing to Nominal GDP was 9.27 per cent , lower than growth recorded in the corresponding period of 2017 at 9.31 per cent but higher than the 8.53 per cent recorded in the fourth quarter of 2017.
Real GDP growth in the manufacturing sector in the current quarter of 2018 was 3.39 per cent year on year higher than the same quarter of 2017 and the preceding quarter by 2.03 per cent points and 3.26 percentage points respectively.
The agricultural sector in the First quarter of 2018 grew by three per cent year-on-year in real terms, a decrease of 0.38 percentage points from the corresponding period of 2017 also a decrease by 1.23 percentage points from the preceding quarter. The sector contributed 21.65 per cent to overall GDP in real terms, higher than the contributions in the first quarter of 2017 and lower than fourth quarter of 2017 which stood at 21.43 per cent and 26.13 per cent respectively.
In nominal terms, the first quarter of 2018 saw the sector grow by 1.79 per cent (year-on-year), a 7.25 per cent points decrease from the rate of 9.04 per cent recorded in the same quarter of 2017. However, it is 2.34 per cent points higher than rate recorded in the preceding quarter. The Quarter on Quarter growth rate was –3.58 per cent.
The Information and Communications sector contributed 10.64 per cent to total Nominal GDP in the 2018 first quarter, lower than the rate of 11.43 per cent recorded in the same quarter of 2017 but higher than the 10.04 per cent it contributed in the preceding quarter. The sector in the first quarter of 2018 recorded a growth rate of 1.58 per cent in real terms, year on year.
From the rate recorded in the corresponding period of 2017, there was a decline by 1.15 per cent points. Quarter on Quarter, the sector exhibited a growth of –4.15 per cent in real terms. Of total real GDP, the sector contributed 12.41 per cent in 2018 first quarter, lower than in the same quarter of the previous year in which it represented 12.46 per cent but higher than the preceding quarter, in which it represented 11.35 per cent.
However, the nation’s economic growth reportedly slowed in the first quarter despite the fact that the increase in oil prices and production.
While it accounts for only about 10 percent of GDP, oil generates the bulk of government revenue for Nigeria, and helps to prop up the economy. Output rose to 2 million barrels a day in the quarter, the highest since the first quarter of 2016, according to the statistics bureau. The non-oil sector expanded 0.8 percent in the quarter.
The GDP expansion lags the 2.6 percent median estimate in a Bloomberg survey. The first quarter’s numbers “are surprisingly weak,” Michael Famoroti, chief economist, Vetiva Capital Management Ltd., said by email.
While this could make a case for the Monetary Policy Committee to ease borrowing costs to try and stimulate growth, “the best way to do this would be to further engender price and exchange-rate stability. Therefore, we do not expect the MPC to move for a rate cut on the back of these GDP figures,” he said.
Meanwhile, Oil prices moved up yesterday, on the news that China and the United States had put a looming trade war between the world’s two biggest economies “on hold”. Brent crude futures were at $78.87 per barrel up 36 cents, or 0.5 percent, from their last close. Brent broke through $80 for the first time since November 2014 last week.
Also, the U.S. West Texas Intermediate (WTI) crude futures were at $71.68 a barrel, up 40 cents, or 0.6 percent, from their last settlement. The U.S. trade war with China is “on hold” after the world’s largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said, giving global markets a lift in early trading on Monday.
“The U.S. and China agreeing to no trade war will be positive for oil prices given that the possibility of a full-out trade war would have dealt a significant blow to global growth,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
However, crude prices were some way off the November 2014 highs reached last week as many traders and analysts say there is enough supply to meet demand despite ongoing production cuts led by the Organization of the Petroleum Exporting Countries (OPEC), plunging output in crisis-struck Venezuela and looming U.S. sanctions against major oil producer Iran.
“Without a further escalation in geopolitical risk, oil might be due a pullback,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader. BP’s chief executive Bob Dudley told Reuters he expected a flood of U.S. shale and a possible reopening of OPEC taps to cool oil markets after crude rose above $80 a barrel last week.
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