The Nigerian Economic Summit Group (NESG) has predicted a slower economic growth rate for the Nigerian economy in the third and fourth quarter of 2021, citing key indications.
According to data from the National Bureau of Statistics, Nigeria’s real Gross Domestic Product (GDP) grew by 5.01% to N16.7 trillion in the second quarter of 2021 (2021Q2), from N15.9 trillion in the second quarter of 2020. This represents the highest quarterly growth rate since 2014.
Despite this high positive year-on-year growth of 5%, the economy, in 2021Q2, did not perform better when compared with the first quarter of 2021. In fact, real GDP declined by 0.8 per cent on a quarter-on-quarter basis as real GDP value was N16.8 trillion in the first quarter of 2021 (2021Q2: N16.7 trillion).
In a document that was released yesterday, the NESG said while the quarter-on-quarter growth was expected, attention must be paid to the quarter-on-quarter performance which showed a contraction in quarter.
“As the base effect weakens, we expect slower growth on a year-on-year basis in the remaining quarters of 2021,” the NESG said in the document that was signed by its chief economist and director of research and development, Dr Olusegun Omisakin.
To reverse the quarter-on-quarter GDP decline, NESG urged the authorities to intensify actions in addressing insecurity across the country; design a framework for addressing policy and regulatory consistency and mplement reforms to open-up key sectors with high job creation potential such as manufacturing, trade, construction, education, health, professional services and digital economy.
“Intensify efforts to unlock new growth and revenue enhancing areas: sale/privatization
of dead public assets, the digital economy, public-private partnerships in infrastructure
and the development of solid minerals, manufacturing and the gas sector,” the economic group also said.
Going forward, Omisakin said key drivers of economic activities in coming quarters will include foreign exchange availability, the state of insecurity, government support for key sectors, improving demand conditions and the weather condition, which could have a negative effect on agriculture especially due to the anticipation of floods in some parts of the country.
“Factors such as infrastructure, logistics bottlenecks, power supply will also be important,” he said.
For the crude oil sector, going by the increase in the OPEC quota to 1.83mbpd, oil production in Nigeria is likely to perform better than what was achieved in 2021Q2. The Petroleum Industry Act also raises the level of optimism in the sector and could attract the much-needed investments. This suggests a better performance for the oil sector in the medium term.