FREE

NIGERIA GROSS DOMESTIC PRODUCT - Riding on a low base, GDP expands in Q1’22

Nigeria’s growth numbers in Q1’22 defied the Ukraine-Russia tensions as real output expanded by 3.11% y/y. While the outcome was barely 14bps above our expectations (Vetiva: 2.97% y/y), this was still in line with our expectations that the previous year’s low base would provide a soft landing for above-average growth in Q1’22.

 

From a broader perspective, the Services and Agricultural sectors, which jointly account for 78% of the Nigerian economy, were responsible for the expansion in real output. We attribute the expansion in the services sector to the Information & Communications (ICT), Trade, and Finance sectors. We also observed strong growth in the agricultural sector, thanks to several interventions. The contraction in the Industrial sector was driven by the sustained downturn in the oil sector.

 

ICT and Finance fly high in Q1’22

Dissecting the contribution to growth at the sectoral level, the ICT sector dominated the league. We note that in the prior year, restrictions on SIM registrations dragged growth in this sector. In April last year, the Federal Government lifted the ban on new SIM registrations. This spurred record growth in SIM registrations as individuals rushed to retrieve misplaced/stolen communication lines.

 

Oil sector remains in 8-quarter long recession

The oil sector contracted by 26.04% y/y in Q1’22, its worst contraction since the rebasing of the GDP. The last time the oil sector contracted by over 20% was in Q3’16, following the shutdown of the Trans-Forcados pipeline. While the 2016 relapse was linked to militancy, incidences of crude thefts led to the drawback in Q1’22. Oil production fell to a historic low of 1.49 million barrels per day (Q1’21: 1.72 mb/d) despite war-induced high oil prices