Q12022 GDP Report: Non-Oil Sector Fuels Growth; Base Effect and Improved Conditions to the Rescue
- Building on the resurgence reported in FY 2021 when the Nigerian Gross Domestic Product (output method) posted a 3.40% YoY performance. In the recently released data by the National Bureau of Statistics (NBS), the economy grew 3.11% in the first quarter of 2022. The oil sector remained in the woods for the eighth consecutive quarter (since Q2 2020) with a 26.0% YoY contraction in Q1 2022 — the worst quarterly performance on record. We observed that the sustained plunge in production volumes; an offshoot of the woes (theft, vandalism, weak infrastructure) that betide the sector, affected the sector’s performance. Specifically, oil production reported marked decline (Down 15.4% to 1.49mbpd in Q1 2022 compared to 1.72mbpd in Q1 2021) in the period.
- On the other hand, the non-oil sector reported sustained positive momentum, growing by 6.08% in the period. The impressive performance rode on improvements recorded across agriculture, manufacturing, telecommunications, trade, and financial services. In the Agricultural Sector, growth (Up 3.16% YoY) primarily hinged on improved crop production in the quarter.
- For 2022, we see the oil sector sustaining its downtrend, contracting within a range of 6 - 10% by full year. This position is guided by our expectation that oil production would remain below 1.5mbpd (Vs 1.6mbpd in 2021). For the non-oil sector, we expect growth to normalize in the remaining quarters of the year due to high base effect from 2021. For Agriculture, we expect tepid growth, as food production slows down from Q2 2022. We believe this would ride on the back of surging input prices (especially fertilizers) amid the commencement of planting season.
- Furthermore, we expect the Telecommunications sector growth to be encumbered from Q2 as the ban on un-linked SIM cards takes a toll on the segment. For the Manufacturing sector, increased capital projects which should be sustained as the general elections moves closer would keep Cement consumption healthy. Similarly, we are optimistic that the Food, Beverage, and Tobacco sub-segment would support the segment. On the balance of factors, we expect the higher base from Q2 2021 to slow down overall GDP growth for the later periods of the year. . In this light, we expect growth to range between 2.3% to 2.7% in the period
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