•Oil production rises to 1.96mbpd
•Rewane, others seek economic plan
James Emejo in Abuja and Nume Ekeghe in Lagos
Nigeria’s brittle economy slowed to 2.1 percent in the first quarter of 2019 (Q1, 2019), according to data released yesterday by the National Bureau of Statistics (NBS).
The nation’s economy, measured by Gross Domestic Product (GDP) growth rate, fell from the 2.38 per cent growth rate of the fourth quarter of 2018.
The economy’s performance fell below the three per cent growth rate projected by the Central Bank of Nigeria (CBN).
However, when compared to the Q1 2018 performance, where real GDP growth rate stood at 1.89 per cent, the Q1 2019 growth represented an increase of 0.12 percentage points, the NBS said.
The sluggish GDP growth has prompted analysts, including the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, to call for a review of Nigeria’s economic management strategy.
According to the statistical agency, quarter-on-quarter real GDP growth declined by -0.38 percentage points.
The GDP Report Q1 2019, which was released yesterday, said aggregated GDP in nominal terms dropped -9.75 per cent to N31.79 trillion, compared to N35.23 trillion in the preceding quarter. But the nominal value is higher than in Q1 2018 estimate of N28.43 trillion, representing a year-on-year nominal growth of 11.80 per cent.
But NBS added that the nominal GDP growth in Q1 2019 was higher than the rate recorded in Q1 2018 by 2.54 percentage points.
The GDP growth was largely aided by the non-oil sectors, which contributed 90.86 percent to total GDP. The oil sector contributed 9.14 percent to the growth in Q1.
The services sector contributed 54.60 percent to real GDP in the non-oil sector while agriculture contributed 21.91 percent and industries 23.49 per cent.
Quarter-on-Quarter, the oil sector recorded a growth rate of 11.60 per cent in Q1 2019.
However, real GDP growth in the sector decreased to -2.40 per cent (year-on-year) in Q1 2019, indicating a decrease by -16.43 percentage points
relative to the rate recorded in the corresponding quarter of 2018.
Growth in the sector decreased by -0.79 percentage points when compared to the -1.62 per cent recorded in Q4 2018.
Meanwhile, oil production increased by 0.05 million barrels per day (mbpd) to1.96 mbpd in Q1 2019 compared to the 1.91mbpd in the preceding quarter. But the data showed that oil production was lower than the 1.98mbpd recorded in the same quarter of 2018 by -0.02mbpd.
The NBS said the level of oil output during the quarter was the highest recorded over the past one year and the second highest since mid-2017.
A further breakdown of the sectoral contributions to growth, however, showed that the contribution of agriculture to real growth was less than the preceding quarter when it recorded 26.15 per cent.
Nevertheless, the sector grew by 3.17 per cent in Q1 compared to 2.46 per cent in Q4 2018.
The manufacturing sector growth also slowed to 0.81 per cent compared to 2.38 per cent in the preceding quarter.
Also, the construction sector grew at 3.18 per cent, (year-on-year) in Q1 from 2.05 per cent in the preceding quarter. It contributed 4.09 per cent to real GDP, up from 3.48 per cent in Q4 2018.
Growth in the trade sector slowed to 0.85 per cent from 1.02 per cent in the preceding quarter. Its share of GDP was 16.87 per cent in Q1 2019, down from 17.07 per cent in Q4 2018.
The information and communication sector grew by 9.48 per cent, down from 13.20 per cent in Q4 2018. But it contributed 13.33 per cent to the GDP growth, up from 12.42 per cent.
Meanwhile, analysts in separate interviews with THISDAY yesterday called for a review of Nigeria’s economic management strategy.
They said the economy needed a stimulus to ensure steady growth.
Reacting to the data released yesterday by the NBS, Rewane said first quarter GDP was seasonally slow, adding that the performance this year coincided with when the country had higher inflation and held its general elections.
He said the federal government would need to formulate a policy that would stabilise the economy and stimulate growth.
He said: “We have to ask ourselves, what are the fiscal and monetary policies that are growth creating or growth-expanding? If we do not have those policies, then we have to discontinue some of the policies.
“Note that the Monetary Policy Committee in March brought down the Monetary Policy Rate (MPR), but it did not bring down the Cash Reserve Requirement (CRR) and increased open market operations activities.
“That is, we brought down the price of money, but we reduced the supply of money, so it became meaningless. So, the stock market declined.”
According to him, it is time to re-examine some policies that were supposed to complement the fiscal incentives but that have not been effective.
“Monetary policy is to enhance fiscal policy and so should not be countercyclical. What we have is a countercyclical monetary policy at this point,” he noted.
But the Managing Director Eczellon Capital, Mr. Diekola Onaolapo, said the latest GDP figures showed that the nation was on a path of economic recovery and growth, despite it being 0.38 per cent lower than the rate recorded in the preceding quarter.
According to Onaolapo, the slowdown could be said to be temporary owing to the seasonal effects of the last quarter of 2018 and the economic dampening effects of the 2019 general election.
“As there are no foreseeable near-term threats to the nation’s macroeconomic fundamentals, it is expected that the growth trajectory of the remaining quarters of the year remain in the positive zone,” he added.
On his part, the Head of Research at Augusto & Co. Mr. Ogbobine Jimi, said: “The new GDP numbers reflect the fragility of the Nigerian economy in the post-recession era. It also reflects the subsisting and undue dependence of the Nigerian economy on crude oil.
“However, the Q1-2019 GDP numbers also reflect a growth, albeit marginal, in economically significant sectors.”