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NSR H1 2020 Excerpts - GDP - Economic growth should remain anemic, flatlined at 2.2%

• The growth momentum remained positive over 2019, with Q3 19 GDP growth of 2.28% augmenting the trend over the first half of the year. Ergo, the economic output expanded by 2.2% YoY over the first nine months in 2019 with support stemming from both the oil and non-oil sectors. Specifically, improved average crude production at 2.02mbpd (9M 18: 1.92mbpd) drove the expansion in the oil sector (+4.1% YoY) while growth in the non-oil sector (+2.0% YoY) mirrors improved output from both the agriculture and services sectors. Over the last quarter of 2019, we project crude production would print at 2.06mbpd (Q4 18: 1.91mbpd), which translates to 7.9% YoY growth in oil GDP. For the non-oil territory, improvement in services, agric and manufacturing sectors informs 1.9% YoY growth in non-oil GDP. Consequently, we expect the economy to grow by 2.4% YoY in Q4 19 which translates to a FY 19 real GDP growth rate of 2.2%.
• Central to growth over 2020 is an anemic pick-up in economic output, with the non-oil sector still the fulcrum. Oil sector at the other at the other end is expected to slow as crude production gradually peaks. On a general note, though recent policies by the apex bank have been directed towards increased lending to the real sector, we do not expect an immediate passthrough to the economy. Our stance is hinged on banking sector’s averse nature towards lending to the real economy as well as persistent infrastructural deficit yet to resolved by the FG. On that note, we expect economic growth over 2020 to flatline at 2.2% YoY- which is our base case.