FREE

Nigeria FY'19 GDP Report - Economy extends recovery by 2.27% y/y in FY'19

Recently released GDP data by the National Bureau of Statistics (NBS) shows that Nigeria’s FY’19 real GDP expanded to 2.27% y/y (FY’18: 1.91% y/y), outperforming Vetiva estimate of 2.19% y/y. Likewise, Q4’19 annual growth rate was higher - at 2.55% y/y – than both the Q3’19 growth rate (2.28% y/y) and Vetiva’s estimate of 2.38% y/y. On a quarterly basis, the growth in Q4’19 was consistent with historical trend as it slowed to 5.59% q/q from 9.23% q/q in Q3’19.

Growth outlook remains tepid
For 2020, we expect the overall growth momentum to remain constrained due to the dearth of much needed reforms to spur robust growth in tangible output. The absence of these reforms will continue to stifle the inflow of Foreign Direct Investments to critical economic sectors. A case in point is the redrafting of the Petroleum Industry Governance Bill (PIGB) after over a decade of impasse. The continued absence of the bill will weigh on the performance of the oil sector, especially as the outlook for oil prices remain downbeat. In addition, the outbreak of the coronavirus is expected to take a toll on the oil sector as well as the manufacturing and trade sectors. Besides the subduing impact of oil prices and the spillover effect on the oil and trade sectors, manufacturers who rely on imported raw materials from China will be constrained due to the extended shutdown of factories in China. Consequently, we expect growth in the oil sector to slow to 3.07% y/y in FY’20 from 4.59% y/y in FY’19. In addition to the impact of subdued oil prices, we do not envisage a shift in the government’s body language from import substitution therefore, we expect trade to contract for the fifth consecutive year (FY’20: -0.66%).