Nigeria Exits Recession But Recovery Weak

Nigeria’s economy emerged from recession in the second quarter, expanding 0.55% year-on-year, the statistics office said on Tuesday, as economists expressed concern at the sluggish recovery.

Africa’s largest economy shrank by 1.5% in 2016 for its first annual contraction in 25 years. It also declined in the first quarter of this year, due to lower revenues from oil—its dominant export—and a shortage of hard currency, Reuters reported.

Crude production slumped last year as militants attacked oil facilities. It recovered in the second quarter to 1.84 million barrels per day, the statistics office said on its Twitter account, after the government engaged in negotiations to address communities’ grievances in its crude-producing heartlands in the Niger Delta.

But that recovery failed to drive a strong rebound in overall economic growth. “This is not at all a robust GDP print, it still falls far short of the growth rates the Nigerian economy should be achieving,” said Razia Khan, chief economist for Africa at Standard Chartered.

“While improved oil production has driven some of the recovery, the output numbers provided by the National Bureau of Statistics suggest that further upside from this source might be limited.”

This growth, according to the NBS is 2.04% higher than the rate recorded in the corresponding quarter of 2016 (–1.49%) and higher by 1.46% points from rate recorded in the preceding quarter, (revised to –0.91% from –0.52%).

It said quarter on quarter, real GDP growth was 3.23%. During the quarter, aggregate GDP stood at Naira 26,986,005.20 million ($75,065) in nominal terms, compared to N23,547,466.91 million in Q2 2016, resulting in a nominal GDP growth of 14.60 per cent.

The statistics office attributes the economic recovery to the performance of four main economic activities comprising oil, agriculture, manufacturing and trade.

Oil GDP recovered significantly from -11.63% in Q2 2016 to 1.64% in Q2 2017, while non-oil GDP grew marginally at 0.45%. Agriculture grew 3.01% in Q2 2017, from 3.39% in Q1 2017.

Manufacturing retained its positive growth for the second consecutive quarter in Q2 2017, growing at 0.64%, while trade which has a dominant share of GDP remained negative at -1.62%.

Financial institutions saw an 11.78% jump in Q2 2017, compared to 0.60% in Q1 2017 and -13.24% in Q2 2016. While the industry sector grew positively by 1.45% in Q2 2017, after nine consecutive quarters of negative growth since Q4 2014.