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Economy slipping below FG’s projection, records 3.11% growth in Q1

By Geoff Iyatse and Helen Oji
24 May 2022   |   4:04 am
Nigeria’s output grew by 3.1 per cent in real-time in the first quarter but the expansion lags modestly from the 4.2 per cent annualised growth projected by the Federal Government in its yearly budget framework.

• Experts insist growth not inclusive, blame rising population, others
Nigeria’s output grew by 3.1 per cent in real-time in the first quarter but the expansion lags modestly from the 4.2 per cent annualised growth projected by the Federal Government in its yearly budget framework.
  
The quarterly growth curve may have been sloping downward as the economy slumped by 15 per cent quarter-on-quarter (Q/Q). The Guardian had, earlier in the year, reported that the growth charts were flattening out towards the end of last year.
 
According to data released by the National Bureau of Statistics ((NBS), yesterday, the country’s real Gross Domestic Product (real GDP) stood at N17.57 trillion, N3.1 trillion short of N20.67 trillion reported in the last quarter (Q4) of last year. Q4 outputs, however, are extremely positively influenced by seasonal activities.
   


The economy slipped into recession in the second and third quarters of 2020 but began an aggressive growth toward the mid-last year. The growth has since slowed down, leading to a downward sloping growth in the past two three quarters.  
   
The growth peaked at 5.01 per cent in Q2, 2021 and slowed down to 4.03 per cent the following quarter. The last two quarters were 3. 98 per cent and 3.11 per cent respectively.
   
With the general elections and rising political risks, Nigeria would need to double up to meet the 3.4 per cent growth forecast of the International Monetary Fund (IMF). The Fund had in April, on account of bullish oil prices, upgraded the country’s growth projection by 0.7 percentage points from the earlier 2.7 per cent estimate.
  
Former President of the Chartered Institute of Banking of Nigeria, Dr Uche Olowu, said the economy has witnessed some level of growth but stated that it is not inclusive considering the nation’s fast growing population.
   
He pointed out that for the country to achieve meaningful growth and impact positively on the various sectors, the level of growth must outstrip population growth.
  
To achieve this, Olowu said there is need for government to embark on reforms that would attract more Foreign Direct Investment (FDI) into the country and focus more on growing the ICT sector.
   

“There is growth but it is not inclusive. The unemployment and population growth rate is still very high. The nation’s GDP should grow by seven to eight per cent to reflect more on the economy, if not, we are pouring water on a rock. We need to outstrip population growth because if the population growth is higher than GDP, we would sink deeper and deeper.
 
Professor of Economics, Babcock University, Segun Ajibola said the good news is that the country is currently witnessing economic growth propelled by the real sector, especially agric and services.
  
According to him, this is sending in some positive signals as opposed to a heavily oil-dependent economy that has been the lot of Nigeria for decades.
  
He said the growth momentum could be sustained if policies and programmes continue to provide incentives for the growing sectors.
   
Ajibola also stated categorically that these policies must be accompanied by actions and deliverables to impact positively on the lives of the citizens for the growth to have the desired impact.
   
Vice President of Highcap securities, David Adonri said the increase in GDP is not surprising as more economic activities are taking place in the country presently.
   
However, he argued that the increase in agricultural contribution to GDP is not reflective of the hyperinflation bedeviling the sector.
 
“When price instability is added to insecurity and political risk posed by the 2023 general election, sustenance of economic growth might not be possible,” he warned.
    
According to the report, the country’s oil and gas continue to face challenges as Q1 recorded 1.49 million barrels per day (mbpd) production, the lowest in recent years.
 

“First quarter of 2022 recorded an average daily oil production of 1.49 million barrels per day (mbpd), lower than the daily average production of 1.72mbpd recorded in the same quarter of 2021 by 0.23 mbpd and lower than the fourth quarter 2021 production volume of 1.5 mbpd by 0.01mbpd,” the report disclosed.
   
Thus, the real year-on-year growth of the oil sector was –26.04 per cent in Q1 2022. Growth in the sector decreased by 17.99 percentage points when compared to Q4 2021, which was –8.06 per cent.
   
NBS noted: “The non-oil sector grew by 6.08 per cent in real terms during the reference quarter (Q1 2022). This rate was higher by 5.28 percentage points compared to the rate recorded in the same quarter of 2021 and 1.34 percentage points higher than the fourth quarter of 2021. This sector was driven in the first quarter of 2022 mainly by information and communication (Telecommunication), trade, financial and insurance (financial institutions); agriculture (crop production) and manufacturing (food, beverage and tobacco), accounting for positive GDP growth.

“In real terms, the non-oil sector contributed 93.37 per cent to the nation’s GDP in the first quarter of 2022, higher than the share recorded in the first quarter of 2021, which was 90.75 per cent and lower than the fourth quarter of 2021 recorded as 94.81 per cent.”

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