Nigerian Economy Expands 3.54% in Second Quarter
The Nigerian economy expands 3.54% in the second quarter of 2022, the National Bureau of Statistics (NBS) said in a report showing an uptick in gross domestic product (GDP) compared with the 3.1% year-on-year growth recorded in Q1 -2022.
On a quarterly basis, the economy contracted by -0.4%, reflecting slower economic activity compared with the preceding quarter. The quarter-on-quarter decline is partly attributed to upticks in prices of deregulated petroleum products (such as diesel and aviation fuel) as well as select manufacturing inputs on the back of the Russia-Ukraine crisis.
The oil economy recorded negative growth for the ninth consecutive quarter, contracting by -11.8% year on year in the second quarter as against a -26% downtrend recorded in the first quarter of the same year.
Based on data from the NBS, average crude oil production in Q2 was 1.43 million barrels per day (mbpd) compared with 1.49mbpd in the previous quarter and 1.61mbpd in Q2-2021. As of end-June, the OPEC production quota for Nigeria was 1.8mbpd.
Meanwhile, the revised FGN oil production benchmark is 1.6mbpd. READ: Nigeria’s Economy Expands 3.40% in 2021
The sector continues to suffer from production shut-ins as a result of crude oil theft, vandalism, prolonged repairs and community issues. The non-oil economy grew by 4.8% in Q2 -2022 compared with 6.1% year on year in Q1 -2022.
Key drivers within the non-oil economy account for 78.3% of total GDP in Q2. These sectors include transportation and storage, finance and insurance, telecommunications, trade, real estate, construction, manufacturing, and agriculture.
In the second quarter of the year, NBS report shows that Agriculture grew by 1.2% year on year compared with 3.2% growth seen in the first quarter.
Crop production was the major driver of the sector and accounted for 90% of agriculture GDP, the segment grew by 1.5% year on year. The forestry and fisheries segments grew by 1.3% and 0.9% respectively.
However, the livestock segment contracted by -2.9%. It is noted that Agriculture contributed 23.2% to GDP in Q2 -2022. The sector’s performance is partly hinged upon the CBN’s interventions in the sector.
Report shows that disbursement under the Anchor Borrowers’ Program as at June 2022 is about N1trn disbursed to about 4.2 million smallholder farmers cultivating 21 commodities across the country.
However, it is worth highlighting that in addition to rising cost of farm inputs, the sector is adversely impacted by insecurity as well as storage and logistics issues.
Telecommunications posted a growth of 7.7% compared with 14.5% recorded in Q1. The segment continues to benefit from modest growth in subscriptions and increased usage from existing subscribers.
The increased demand for data by businesses adopting hybrid working structures has also supported growth, which is mirrored in the uptick in internet subscriptions within the period.
The trickle-down effect of the ongoing Russia-Ukraine crisis became apparent in Q2, negatively affecting businesses within the manufacturing sector.
On a quarter-on-quarter basis, manufacturing contracted by -15.5%. However, it posted a year-on-year growth of 3% compared with 5.9% year-on-year recorded in Q1.
Within the sector, the food and beverages segment grew by 5.1% y/y and accounted for 51% of the total manufacturing GDP. Meanwhile, the textile, apparel, and footwear segment contracted by -2.8% y/y. Cement posted growth 4.9% y/y.
