EUR 4.00 For Business Accounts Only

Macroeconomic Update - February 2021

• Non-oil Sector saves the day:  The Nigerian economy exited recession in Q4 2020, recording a growth of 0.11% YoY due to a rebound in the non-oil sector, resulting in full year 2020 GDP contraction of 1.94%. This was contrary to our expectation of a 1.98% contraction in Q4 2020 and -2.46% contraction over full year 2020. Precisely, the deviation from our forecast stemmed from better-than-expected outturn in the Agric and Services sector, while Trade sector contracted at a much slower pace than anticipated.
• As earlier mentioned, the non-oil sector spurred the growth in GDP, expanding by 1.7% YoY in Q4 2020 (Q3 2020: -2.5% YoY), while the Oil sector witnessed its steepest contraction since 2015, declining by 19.8% YoY in Q4 2020 (Q3 2020: -13.9% YoY).On the oil sector, the contraction reflects a moderation in crude oil production which printed at 1.56mbpd - lowest in over 9 years (vs Q3 20: 1.67mbpd), mirroring higher level of compliance by Nigeria to the required OPEC production cut.
• Going further into 2021, we expect a rebound in economic activities, bulk of which should stem from the Non-oil sector. Starting off with the oil sector, over the first quarter of the year, we expect the negative trend to persist owing to the continuous compliance to OPEC plus production cuts, as well as higher base from the prior year. Precisely, we project a crude oil production level of 1.75mbpd in Q1 21 (Q1 20: 2.07mbpd), which translates into a 15% YoY contraction in the oil sector. On the non-oil leg, we expect continuous growth in the Agric, Services, Building and construction and a marginal growth in Manufacturing sector to drive a 1.9% YoY growth in the non-oil sector. For the Agric sector, we expect continuous intervention by the government in addition to ongoing farming activities to drive growth numbers.