Non-oil Sector Still Saving Grace for Economy

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Background concept wordcloud illustration of GDP domestic economy

Though gross domestic product (GDP) recorded a shortfall of -0.38 per cent in real terms in first quarter of this year compared to the position in the fourth quarter of 2018, it, nevertheless, grew by 0.12 per cent over the level in first quarter of 2018. The non-oil sector remains the key driver of the growth, accounting for about 91percent of the real GDP growth, reports Bamidele Famoofo

There are indications that Nigeria can drive the growth of its economy with little or no reliance on revenue from oil.

The facts emerged from figures released from the National Bureau of Statistics (NBS) about the performance of the GDP as at end of April 2019. According to the bureau, the GDP as at end of April 2019 stood at 2.01 per cent.

Though the figure as at April fell short of the performance of GDP in last quarter of 2018 by -0.38 per cent, year-on-year, it recorded a growth of 2.54 percent compared to 1.89 percent growth achieved in first quarter of 2018.

The growth achieved in the first quarter of 2019, according to the Statistician General, NBS, Dr. Yemi Kale, was the strongest the nation had achieved since 2015.

The NBS attributed the growth in the first quarter to activities before and during the elections in March, noting that aggregate GDP stood at about N31.8 trillion in nominal terms.

“This aggregate was higher than in the first quarter of 2018 which recorded N28,438,604.23 million, representing a year-on-year nominal growth rate of 11.80 percent.

The aggregate was, however, lower than in the preceding quarter of N35, 230,607.63 million (N35.2trillion), by -9.75 percent. The nominal GDP growth rate in Q1 2019 was higher than the rate recorded in Q1 2018 by 2.54 percent points,” NBS disclosed.

But the year-on-year real GDP growth of 0.12 per cent achieved in the review first quarter period was achieved mainly by economic activities that took place in the non-oil sector as the oil sector recorded a dismal performance in the same period, contributing only 9.14 per cent to GDP.

Non-Oil Sector

The non-oil sector grew by 2.47per cent in real terms during the reference quarter. This was 1.72per cent points higher compared to the rate recorded in the same quarter of 2018, but -0.23 percentage points lower than the fourth quarter of 2018. During the quarter, the sector was driven mainly by information and communication technology.

Other drivers were agriculture, transportation and storage, trade and construction. In real terms, the non-oil sector contributed 90.86 per cent to the nation’s GDP, higher than recorded in the first quarter of 2018 (90.45 per cent) but lower than the fourth quarter of 2018 (92.94 per cent).

ICT

The information and communications sector contributed 10.61 per cent to nominal GDP in Q1 2019, slightly lower than the rate of 10.65 per cent recorded in the same quarter of 2018, but higher than the 10.23 per cent it contributed in the preceding quarter.

The sector in the first quarter of 2019 recorded a growth rate of 9.48 per cent in real terms, year on year, representing an increase of 7.90 percentage points. Quarter on Quarter, the sector exhibited a growth of -7.29 per cent in real terms.

In terms of contribution to real GDP, the sector contributed 13.33 per cent in Q1 2019, higher than in the same quarter of the previous year in which it accounted for 12.42per cent and in the preceding quarter, in which it represented 12.40 per cent.

The first quarter of 2019 saw the sector grow by 11.45per cent (year-on-year). The quarter-on-quarter growth rate recorded in the current quarter was -6.41 percent.

The information and communication sector comprises of the four activities of telecommunications and information services; publishing; motion picture, sound recording and music production; and broadcasting.

Agriculture

Agriculture contributed 19.11 per cent to nominal GDP during the quarter, higher than the recorded contribution in the first quarter of 2018, but lower than recorded in the fourth quarter.

The sector grew by 22.58per cent year-on-year in nominal terms in Q1 2019, showing an increase of 16.78per cent points from the same quarter of 2018. Compared to the preceding quarter, the nominal GDP growth rate was about four per cent points higher. Crop production remains the major driver of the sector. This is evident as it accounted for 85 per cent of agriculture GDP. Quarter on quarter, growth stood at -25.27percent.

In real terms, the agricultural sector grew by 3.17per cent (year-on-year) in the first quarter of 2019, an increase of 0.17 per cent points compared to the corresponding quarter of 2018, and 0.72 per cent points compared to the preceding quarter.

During the quarter, the sector contributed 21.91 per cent to real GDP, higher than the contribution in the first quarter of 2018 (21.66 per cent) but lowers than the fourth quarter of 2018 (26.15 per cent).

Manufacturing

The manufacturing sector comprises of 13 activities: Oil Refining; Cement; Food, Beverages and Tobacco; Textile, Apparel, and Footwear; Wood and Wood products; Pulp Paper and Paper products; Chemical and Pharmaceutical products; Non-metallic Products, Plastic and Rubber products; Electrical and Electronic, Basic Metal and Iron and Steel; Motor Vehicles and Assembly; and Other Manufacturing.

In the first quarter of 2019, nominal GDP growth in the manufacturing sector was recorded at 36.45per cent (year-on-year), or 27.52 per cent points higher than the rate recorded in the corresponding period of 2018 (8.93 per cent), and 2.88per cent points higher than in the preceding quarter. Quarter on quarter, manufacturing sector recorded a growth rate of 1.09per cent. The sector’s contribution to nominal GDP during the quarter was 11.32per cent, higher than its contribution in both the first quarter (9.28 per cent) and the fourth quarter (10.11 per cent) of 2018.

Real GDP growth in the manufacturing sector was 0.81 per cent in the first quarter of 2019 (year on year). This was lower than in the same quarter of 2018 by -2.59percent points, and the preceding quarter by -1.54per cent points. On a quarter-on-quarter basis, the growth rate stood at -4.62per cent. In terms of its contribution, the sector accounted for 9.80per cent of real GDP in Q1 2019, lower than the 9.91 per cent recorded in the first quarter of 2018 but higher than the 8.86per cent recorded in the fourth quarter of 2018.

Construction

The construction sector grew by about 70.0 per cent in nominal terms (year on year) in the first quarter of 2019, an increase of 58.02 per cent points compared to the rate recorded in the same quarter of 2018. This was also higher when compared to the rate recorded in the preceding quarter. On a quarter-on-quarter basis, nominal growth was recorded at 10.62 percent. Construction contributed 6.17 per cent to nominal GDP in the first quarter of 2019, higher than the 4.13per cent contribution a year earlier, and the 5.03per cent contributed in the fourth quarter of 2018.Nigerian According to the NBS, the real growth rate of the construction sector in the first quarter of 2019 stood at 3.18 percent (year on year), or 4.71per cent points higher than the rate recorded a year earlier. Relative to the preceding quarter, there was an increase of 1.13 per cent points. Quarter on quarter, the sector grew by 1.36per cent in real terms.

By contribution, the construction sector accounted for 4.09per cent of real GDP in the first quarter of 2019, higher than its contribution of 4.04per cent in the same quarter of 2018, and the 3.48 percent contribution recorded in the preceding quarter.

Trade

In the first quarter of 2019, the nominal year on year growth in Trade services stood at 4.82percent. This indicates an increase of 6.94percentage points when compared to the first quarter of 2018, and 0.40 percentage points when compared to the fourth quarter. The quarter on quarter growth rate was -11.23per cent. Trade’s contribution to nominal GDP in the first quarter of 2019 was 16.96per cent, lower than the contribution in the same quarter in 2018, and lower than the preceding quarter’s contribution, recorded at 17.24percent.

In real terms, the year-on-year growth rate for trade services stood at 0.85per cent, which is 3.42per cent points higher than the rate recorded the previous year, and -0.17per cent points lower than in the preceding quarter. Quarter on quarter, growth stood at -11.80 per cent. In real terms, trade’s contribution to GDP was 16.87 per cent, lower than the 17.07per cent it accounted for in the previous year, but higher than the 16.50per cent recorded in the fourth quarter of 2018.

Oil Sector

In the first quarter of 2019, average daily oil production stood at 1.96million barrels per day (mbpd), lower than the average daily production of 1.98mbpd recorded in the same quarter of 2018 by -0.02mbpd but higher than the fourth quarter 2018 production volume by 0.05mbpd. The level of oil output during the quarter was the highest recorded over the past one year and the second highest since mid 2017.

Real GDP growth in the oil sector was -2.40per cent (year-on-year) in Q1 2019 indicating a decrease by -16.43per cent points relative to the rate recorded in the corresponding quarter of 2018. Growth decreased by -0.79per cent points when compared to Q4 2018 which was -1.62per cent. Quarter-on-quarter, the oil sector recorded a growth rate of 11.60per cent in Q1 2019.

The oil sector contributed 9.14 per cent to total real GDP in Q1 2019, down from the position in the corresponding period of 2018, and up compared to the preceding quarter, as it contributed 9.55 percent and 7.06 percent respectively.