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Nigeria Q1'20 GDP Report - Economic growth slows to 1.87% y/y in Q1'20

Economic growth in Nigeria slowed to 1.87% in the January-March quarter from a year ago, according to the GDP data released by the National Bureau of Statistics (NBS). This makes it the slowest growth since Q4’18, as disruptions to global supply chains and a collapse in external demand weighed on overall economic activity. Q1’20 annual growth rate was lower than both the Q1’19 (2.10% y/y) and Q4’19 (2.55% y/y) growth rates. 

The oil sector, which accounted for 9.50% of real output in Q1’20 (Q1’19: 9.22%) expanded by 5.06% y/y compared to a 1.46% y/y contraction in Q1’19. The performance of the oil sector was driven by the low base from Q1’19, on the back of a three-week downtime in the Nembe Creek Trunk Line. In addition to improved uptime on the Nembe Creek Trunk Line, improvement in oil production at the Egina oilfield contributed to the eighty thousand barrel increase in average oil production to 2.07mbpd in Q1’20 from 1.99mbpd in Q1’19. This supported a much stronger recovery in the sector in Q1’20, over Q1’19. Consequently, the oil sector contributed 25% (worth ₦76.61bn) of the additional output in Q1’20, over Q1’19.

Technical recession looms

In 2020, partial lockdowns implemented across many states to contain the spread of the pandemic is expected to weigh on overall economic activity. The lockdowns which commenced at the end of March, and is likely to be in place through June, will weigh on operations across many sectors and limit their contributing output to growth. Social distancing measures, such as reduction in the number of employees working onsite, are also expected to persist for as long as a coronavirus vaccine is yet to found. As the earliest date for discovering a viable vaccine is put at 2021, we expect social distancing measure to weigh on many sectors for the rest of the year including the transportation, agriculture, manufacturing and construction sectors