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Nigeria Strategy Report H2 2019 Excerpts - GDP - Modest growth, not much solace

• In this morning’s cut-out of our core strategy document – The Nigeria Strategy Report, we focus on development in the domestic environment highlighting our views on the drivers of growth over H1 2019. In addition to delineating the drivers of growth, this section presents our outlook on key triggers of economic growth over the rest of 2019.
• The Nigerian economy expanded by 2.0% YoY for the first quarter of 2019 led by improved activities in the non-oil sector even as low crude production drove a contraction in oil sector. The services sector and Agric sector which accounts for majority of the economy led the momentum, driving an expansion in non-oil space by 2.5% YoY. Suffice to say, while the outturn in the Agriculture sector at 3.2% aligned with our surmise – activities in the services sector exceeded our expectation as an unanticipated level of improvement in voice subscribers left the output in the information and communications technology (ICT) sector stronger, with growth at 3.1%. On the flipside, oil sector contracted further by 2.4% YoY for the fourth consecutive quarter, mirroring a decline in crude oil production.
• Central to our outlook over the rest of 2019 is the impact of recently discovered pipeline leakages, production activities at the Egina Oilfield, recovery in both the Agriculture and manufacturing sectors coupled with a sustained improvement in the services sector. In the oil sector, additional 200,000bpd capacity from Egina oilfield coupled with a lower plausibility of militant attacks guides our surmise of improved output in coming quarters, with expected crude oil production of 2.04mbpd. In the non-oil territory, improved farming activities as conflict in the north moderates, recovery in manufacturing sector following the conclusion of elections and increased active subscribers would lead to an expansion in non-oil output. That said, we expect the Nigerian economy to grow by 2.2% YoY over 2019 (2018: 1.9% YoY).