Weak GDP growth: Economy reacts to lack of fiscal stimulus – Experts

Despite a 1.94% growth in the second half of economic year 2019, some analysts said the growth came weak when compare with surge in population.

Analysts are of the view that at this time, Nigeria should be doing significantly well ahead of its peer in the frontier and emerging economies. As a  petrol dollar powered economy, oil prices and production volumes have been fairly stable, analysts observed.

MarketForces gathered that performance has been largely been disappointing given the fact that global price of oil has been fairly stable.

Analysts stated that in a rather disappointing show, the Q2’19 GDP figures revealed that the economy grew by 1.94% year-on-year in the second quarter of 2019, a decline in revised GDP growth of 2.10% in the first quarter 2019.

Analysts at WSTC said, “In our view, we see this development as a manifestation of the lack of policy direction, weak government spending amid delayed budget implementation, and delayed ministerial appointments”.

Analysts stated that the Oil GDP recorded the most robust growth since first quarter of 2018 at 14.02%, growing by 5.15% year-on-year in the second quarter of 2019.

WSTC observed that the increase in Oil GDP was driven by an improved daily average production of crude oil during the period.

In the second quarter, the average daily output of crude oil stood at 1.98 million barrels day, relative to 1.84 million barrels per day in second quarter of 2018. However, the average daily production in the second quarter of 2019 was marginally lower than 1.98 million barrels per day produced in the first quarter in 2019.

“We attribute the growth in oil production to the increased production buoyed by the Total FPSO that started in January 2019”, WSTC said.

Non-Oil GDP

Non-Oil GDP grew by 1.64% in the second quarter of 2019, from 2.47% in the first quarter. Also on a year-on-year basis, non-oil GDP growth rate declined from 2.05% in the second quarter of 202018.

The sluggish growth in non-oil GDP was primarily driven by slow growth in core sectors like Agriculture, Trade, Information and Communication, Manufacturing, and Real Estate; all of which contributes about 69%-70% to the overall GDP.


Meanwhile, the Agricultural sector contributed 23% to the total GDP. Agriculture GDP grew by 1.79% in the second quarter of 2019, from 3.17% in the first quarter 2019.

WSTC said it attributes the weak growth of the Agricultural sector in the second quarter to the high logistics and transportation costs during the period as bottlenecks in supply of food crops, hence dampening output growth.


Trade contributed 16% to the total GDP, the numbers show. The Trade sector slid to negative territory in the second quarter after three consecutive quarters of growth.  Trade sector declined by 0.25% in the second quarter 2019, from a growth of 0.85% in the first quarter.

“We believe that the decline in Trade GDP is connected to logistics issues affecting imports and exports activities. We also opine that the renewed capital controls efforts by the CBN to stem the importation of certain goods might have had an impact on the Trade GDP”, WSTC remarked.

Information & Communication

It was noted that information & communication sector contributed 15% to the total GDP. The sector recorded its slowest growth rate of 9.01% since the last four quarters.

Breaking down the constituents of the Information & Communication sector, the most significant contributor – Telecommunications grew by 11.34%, albeit lower than the 12.18% reported in the first quarter of 2019, and 11.54% reported in the second quarter 2018.

The drag to the sector came from the Motion Pictures, Sound recording and Music sector which fell into the negative territory, declining by 2.37% in the second quarter 2019 from a growth of 1.13% in the previous quarter.

WSTC said although the sector printed a weaker growth, we believe that the double-digit growth in the Telecommunications sector is a positive one, especially for companies in the Telecommunications space.


Manufacturing sector contributed 9% to the total GDP. The sector declined by 0.13%, from 0.81% in  the first quarter 2019. Further analysis showed that major components of the manufacturing sector recorded a relatively weak performance.

WSTC said for instance, Food. Beverage and Tobacco sector reported a slower growth of 1.22%.

Textile, Apparel and Footwear sector declined by 1.42% . Basic Metal, Iron and Steel sector also declined by 3.06%; Plastic and Rubber Products recorded a relatively slower growth of 2.26%.

Consequently, the decline or relatively weaker growth in these core sectors resulted in the unimpressive performance of the Manufacturing sector in the second quarter of 2019.

Real Estate

The Real Estate sector could not maintain its momentum, reverting to the negative territory, after it grew for the first time by 0.93% in the first quarter of 2019 – a growth that was the first in the last four preceding quarters.


The Real Estate sector contributed 6% to the total GDP during the period.

In its opinion, WSTC stated that the GDP figures came below consensus estimates. The decline was attributed to developments such as late composition of the federal cabinet after the 2019 General Elections in which the economy was somewhat on a pilot mode.

Also, delay in the passage of 2019 budget, and high unemployment; the poor performance of the GDP is not far-fetched.

“In our view, GDP growth in subsequent quarters will largely be determined by the swiftness of the fiscal policymakers to initiate business-friendly policies and boost economic activities.

“Amid declining government revenue, and rising foreign outflows in the economy, The Central Bank of Nigeria has made its intention known to defend the local currency against all the odds.

“Given the current developments in the global space, it might have to do so by offering higher yields to foreign investors to keep them interested in Nigerian assets and manage the capital outflows”, WSTC Securities noted.

Weak GDP growth: Economy reacts to lack of fiscal stimulus – Experts

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