NIGERIA GROSS DOMESTIC PRODUCT - Growth slows on domestic headwinds
Nigeria's economy grew by 2.31% y/y (Vetiva: 2.80% y/y) in Q1'23, according to the National Bureau of Statistics (NBS). This follows a 3.10% year-on-year increase in Q1'22. We attribute the slower growth to the currency-swap induced cash crunch. While favourable base effects spurred a minor recovery in the industrial sector, a slower but modest service sector expansion kept GDP growth above water.
Agricultural Sector: Cash crunch drives downturn
For the first time since the rebasing of the GDP, the agricultural sector contracted. Declining by 0.9% y/y (Q4'22: +2.0% y/y), the sector was dragged largely by the livestock sub-sector, which contracted by 30.6% y/y. This mirrors the impact of the cash crunch on poultry farmers in Q1’23. According to Poultry Association of Nigeria, farmers lost c.₦30 billion due to scarcity of Naira notes, despite deep discounts. Growth in crop production, which accounts for more than 90% of total agricultural output, slowed to 1.9% y/y in Q1'23 (Q1'22: 3.0% y/y). This could be linked to government interventions which has kept the sector afloat. Due to a strong contraction in the agricultural sector (from an expansion in Q3'22), the growth in Q1'23 was 49bps lower than our in-house estimate (2.31% y/y).
Industrials: Construction and manufacturing spur growth
Moving on to the industrial sector, after 7 consecutive quarters of contraction, the broad sector expanded by 0.3% y/y in Q1'23 (Q1'22: -6.81% y/y). Growth in the manufacturing (+1.6% y/y) and construction (+3.3% y/y) sectors aided the industrial sector's expansion, supported by a milder downturn in the oil sector (-1.3% y/y). Although the oil sector contracted in Q1'23, the decline was moderated to 4.2% y/y (Q1'23: -13.4% y/y). Oil production (including condensates) increased by 12.4% q/q in Q1'23 to 1.5 mb/d (Q4'22: 1.35 mb/d), due to renewed pipeline surveillance efforts. However, this was insufficient in lifting oil beyond its 2022 peak of 1.56 mb/d in Q1’22.
Vetiva provides clients with independent and unbiased access to analysis and opinion. We keep our clients on the cutting edge of market information and provide up to date market intelligence on quoted companies. Our services allow brokers, investment firms, and asset managers focus their energies on developing investment strategies and client relationships.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.