By BUKOLA IDOWU and KAYODE TOKEDE, Lagos
Nigeria’s aggregate Gross Domestic Product (GDP) increased to N26.028 trillion in nominal terms compared to N22. 235 trillion in the first quarter of 2016.
This is even as the economy contracted by 0.52 per cent in the first quarter of the year though at a slower pace.
This resulted in a nominal GDP growth of 17.06 per cent, a growth that is higher relative to 11.39 per cent growth recorded in the first quarter 2016. The year-on-year contraction of -0.52 per cent in real terms is the fifth consecutive quarter of contraction since first quarter 2016.
The first quarter 2017 figure is 0.15 per cent higher than the rate recorded in the corresponding quarter of 2016 (revised to –0.67 per cent from –0.36 per cent) higher by 1.21 per cent points from rate recorded in the preceding quarter, (revised to –1.73 per cent from –1.30 per cent).
Quarter-on-quarter, real GDP growth was –12.92 per cent.
According to GDP report released by the National Bureau of Statistics yesterday, the slower decline in real output resulted from improved performance in non-oil sectors especially, agriculture which grew by 3.36 per cent, Information and Communications Technology which grew by 2.74 per cent and manufacturing which grew by 1.36 per cent.
The non-oil sector grew year-on-year by 0.7 per cent as against decline of 0.33 per cent in the last quarter of 2016 to partly offset the y-o-y decline in the oil and gas sector by 11.6 per cent (albeit, slower than -17.7 per cent in Q4 2016).
The agricultural sector remained the dominant sector, accounting for 21.35 per cent of total output, followed by trade which accounted for 17.78 per cent and information and communications which accounted for 12.41 per cent.
The Minister of Finance, Kemi Adeosun, had earlier stated that the country was out of recession, shortly after the governor of the Central Bank of Nigeria, Godwin Emefiele, said the country will be fully out of recession by the second quarter of the year.
President of Council of the Chartered Institute of Bankers of Nigeria (CIBN), Professor Segun Ajibola, while commenting on the released GDP figures noted that the figures are indicative that the country is gradually moving out of recession.
“If you look at the trend, what happened in the first quarter is an improvement over what we had in the previous quarter, because we have had negative growth of -2 and now we are less than one per cent. If all that happened in the first quarter is a negative growth of -0.52 per cent, then we are gradually coming out of recession”, he stated.
An analyst at FXTM, Lukman Otunuga, commenting on the GDP figures said an undeniable feeling of disappointment lingered across Nigerian markets, following reports of the nation’s first quarter GDP growth of 2017 contracting by 0.52 per cent year-on-year.
He said, “Although this economic contraction may weigh heavily on sentiment moving forward, it should be kept in mind that it still remains the best performance seen in four quarters.
“With many sectors of the Nigerian economy turning positive, the overall outlook still looks encouraging with the bullish impacts likely to be realized in the second and third quarter of this year”.
The Chief Executive Officer, Economic Associates, Ayo Teriba, explained to LEADERSHIP that the shrink in GDP can be attributed to improved activities in the non-oil sector, stressing that if the Oil sector challenges are tackled, the nation’s economy will be out of recession.
His words: “The Non-oil sector is no longer contracting; it has started growing. Only the Oil sector is responsible for the contraction we still have in the overall GDP.
“The good news is that many of the Non-Oil sectors that were in recession last year are out of recession- non-oil sectors like Manufacturing, Telecommunications, among others. The lingering problem was that oil as of Q1 2017 had low output despite better price than the corresponding last.
“It is possible for the nation’s economy to get out of recession by Q2 of 2017. The only component that declined in Q1 is Oil and if that is stable, we will be out of recession in Q3 2017”.
However, the Bureau said during the period under review, Oil production averaged at 1.83 million barrels per day (mbpd), 0.07 million barrels higher than the daily average production recorded in the fourth quarter of 2016.
Oil production during the quarter was lower by 0.22 million barrels per day relative to the corresponding quarter 2016, which recorded an output of 2.05 mbpd.
NBS in its report said, “Real growth of the oil sector slowed by -11.64 per cent (year-on-year) in Q1 2017. This represents a decline of (-4.81 per cent) relative to rate recorded in the corresponding quarter of 2016. Growth declined by 6.83 per cent and increased 6.06 per cent when compared to Q1 2016 and Q4 2016 respectively. Quarter-on-quarter, the oil sector grew by 14.86 per cent in the first quarter of 2017.
“As a share of the economy, the oil sector contributed 8.9 per cent of total real GDP in Q1 2017, down from figures recorded in the corresponding period of 2016 and upp from the preceding quarter, where it contributed 10.02 per cent and 6.75 per cent respectively.
“Growth in the Non-oil sector was largely driven by the activities in the agriculture sector (crop production), Information & Communication, Manufacturing, Transportation and Other services.
“The non-oil sector grew by 0.72 per cent in real terms during the reference quarter. This was 1.05 per cent higher than the rate recorded in the fourth quarter of 2016, and 0.90 per cent higher than the corresponding quarter of 2016.
“In real terms, the non-oil sector contributed 91.10 per cent to the nation’s GDP, higher from share recorded in the first quarter of 016(89.98 per cent) but lower than the share recorded in the fourth quarter of 2016 (93.25 per cent).
“The Mining & Quarrying sector is of particular interest as crude petroleum and natural gas (the oil sector-a major source of foreign exchange) is included in the sector along with coal Mining, Metal ore and Quarrying and other Minerals. The Oil sector grew by 140.67 per cent (year-on-year) in the first quarter of 2017, taking into account revised 2016 data.
“This substantial growth rate partly arose as a result of the exchange rate depreciation, which increased the naira value of oil exports, as well as a stronger oil price. Coal mining and Metal ore activities in the sector continued to record strong year on year growth rates, of 19.28 per cent and 64.60 per cent respectively.
“Four sub-activities make up the Agricultural sector: Crop Production, Livestock,, Forestry and Fishing sector grew by 9.80 per cent year-on-year in nominal terms, showing a drop from the same quarter of 2016 by 4.35 per cent points. However, an incline by 3.35 per cent in recorded when compared to the preceding quarter’s growth rate of 6.45 per cent. Crop production remains the major driver of this sector accounting for 92 per cent of overall nominal growth of the sector.
“In the first quarter of 2017, Agriculture contributed 18 per cent to nominal GDP. This figure is lower than the rates recorded for the first and fourth quarters of 2016 at 19.19 per cent and 21.35 per cent respectively”.