Nigeria Strategy Report H1 2019 Excerpts - Domestic Economy - Stable Growth in dire need of fresh impetus
- In this session, we continue discussion with the domestic section of our core strategy document – the Nigeria Strategy Report. In this piece, we focus on development in the domestic environment, highlighting our views on the drivers for economic growth over 2018, and limn our outlook for the domestic economy over 2019.
- For the first nine-month in 2018, the Nigerian economy grew by 1.76%, up from 0.3% reported in a similar period of 2017 – with support stemming largely from the services and agriculture sector. On the Q3 18 numbers, while the oil sector remained in contraction, though moderate, increased output from the services, agriculture and manufacturing sectors pushed economic growth to 1.8%. Over the fourth quarter of 2018, we expect a stronger growth in the economic activities stemming largely from rebound in in the oil sector (4.7% YoY) following higher oil production which we estimate to print at 2.01mbpd (Q4 17: 1.96mbpd). On the non-oil leg, our estimated growth in Agriculture (3%), Services (3.5%) and Manufacturing (1.4%) informs a non-oil sector growth of 2.5%. Consequently, we project a stronger growth in Q4 18 of 2.7% YoY. On balance, full-year 2018 growth estimate stands at 2% relative to 0.8% in full-year 2017.
- Over 2019, we are projecting expansion in growth by 10bps to 2.1% YoY as our views on FX stability for most of the year and expected calmness in the polity post-election is expected to support growth in the economy. Basically, with oil production at 2.0mpd, nearing its peak of 2.3mbpd, economic growth will be largely hinged on the non-oil sector, wherein the need for investment friendly policies will be required to provide fresh impetus for sustained growth. Thus, while we expect the absence of herdsmen conflict, normalcy in the oil producing region, and relative stability in the FX market to support growth in the agriculture, oil and manufacturing sector over 2019, we highlight the risk to growth in our scenarios.
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