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Nigeria Q2'17 GDP - Nigeria Creeps out of Recession

Second quarter Gross Domestic Product (GDP) data from the National Bureau of Statistics (NBS) registers Nigeria’s GDP growth at 0.5% y/y for the period, significantly behind Vetiva and Consensus estimates of 1.9% and 1.3% respectively. Following up from a downwardly revised contraction of 0.9% y/y in Q1’17 (Previous: -0.5%), Q2’17 growth is the first growth recorded post 2015 and marks the end of Nigeria’s five quarters of contraction. The improved performance comes on the back of a minor recovery in oil production, as well as sustained growth in agricultural and industrial output over the period. Meanwhile, the Nigerian economy expanded 14.6% y/y in nominal terms, primarily due to high inflation (GDP deflator up 13.6% y/y), but also aided by the marginal increase in real output in Q2’17.

FY growth projections revised, 1.1% growth anticipated
Whilst the Nigerian economy should persist on a positive growth path for the rest of the year, we warn that most of the growth will be superficial, stemming from higher agriculture (from import substitution) and recovering oil output (from reduced militant activity). Stronger stimulus, preferably fiscal, is required to resuscitate consumption and propel medium-term growth. After accounting for the deviations from our estimates, we project 3.0% growth in Q3’17 (FY’17: 1.1% y/y), from 3.5% y/y previously, driven by downward revisions to all major non-oil sectors.