Nigeria’s recovery from the fallout of the COVID-19 pandemic slowed sharply in the third quarter of this year, with economists saying the economy’s growth was hit by high unemployment, inflation and insecurity plaguing households and businesses.
Figures released by the National Bureau of Statistics on Thursday show that national output expanded by 4.03 per cent in the three months to September, compared to a growth of 5.01 per cent in the three months to June.
The NBS, in its latest GDP report released by the Statistician-General of the Federation Simon Harry in Abuja, said the 4.03 per cent GDP growth showed sustained positive growth over the last four quarters since the recession witnessed in 2020.
He said during the quarter, aggregate nominal GDP stood at N45.11tn, an increase of 15.41 per cent over the performance in the corresponding period of 2020.
He explained that the base effect of the negative economic growth recorded in Q2 and Q3 2020 as a result of the pandemic contributed to the growth in GDP in 2021.
He added that the current growth trend could be sustained with strict adherence to safety measures put in place to control the spread of the COVID-19 pandemic and other variants of the disease.
Harry said the country recorded an average daily oil production of 1.57 million barrels per day in Q3 2021, up from 1.67 million bpd in the same period a year earlier and 1.61 million bpd in Q2 2021.
He said the oil output decline accounted for the oil growth rate of -10.73 per cent in real terms recorded in Q3.
He said the non-oil sector recorded growth of 5.44 per cent in real terms, an improvement from -2.51 per cent in Q3 2020 but a decline compared to the 6.74 per cent recorded in Q2 2021.
Harry said oil sector contributed 7.49 per cent to GDP, compared to 8.73 per cent in Q3 2020, while non-oil sector accounted for 92.51 per cent, an increase from 91.27 per cent in Q3 2020.
Experts lament inflation, employment, security crises
Economists and financial experts, in separate interviews with our correspondents, highlighted the major factors responsible for the slowdown in the nation’s GDP growth and what the government should do to stimulate the economy.
The Chairman of the Foundation for Economic Research and Training, Prof. Akpan Ekpo, attributed the drop in GDP growth to structural problems in the economy.
Akpan said despite the positive growth rate, the economy had not improved as the country continued to experience stagflation.
“The economy is not improving because growth is not development. We are still in a place called stagflation, where there is high unemployment rate, double-digit inflation rate, high lending rate and high misery index,” he told one of our correspondents.
The Managing Director of Cowry Asset Management Limited, Johnson Chukwu, said given that the country’s GDP grew by 0.1 per cent in Q4 2020 and that the trajectory of growth this year was primarily driven by base effect, it was expected that there would be a slower growth rate in the last quarter of the year.
He said, “If you consider that in the last quarter of last year, GDP was positive by 0.11 per cent, it means that we should expect a growth in the first quarter but the growth will be slower than what we saw in Q3.
The CEO, Institute of Credit Administration, Prof. Chris Onalo, said there was a need to tackle insecurity and improve the power supply in the country for activities to pick up better.
A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said the government should work harder to increase the GDP growth for employment generation and increased productive activities.
A professor of Capital Market at the Nasarawa State University Keffi, Uche Uwaleke, said it was cheering to note that the non-oil sector had continued to power real GDP growth rate.
Non-oil sector recovery will fade further – UK research firm
Analysts at London-based Capital Economics said in a note that the drop in Nigeria’s GDP growth in Q3 pointed to the recovery in activity outside the key oil sector petering out.
“We think this will continue over the coming quarters, weighing on headline growth even as oil output gradually picks up,” its Emerging Markets Economist, Virag Forizs, said.
The economic research firm said the rebound in the non-oil economy seemed to have lost some steam.
It said, “The agriculture sector performed particularly poorly last quarter; output shrank by 6.4 per cent y/y. And a third virus wave probably weighed on the retail sector. Growth in wholesale and retail trade declined from 22.5 per cent y/y in Q2 to 11.9 per cent y/y in Q3. Activity in other sectors held up better.
“Looking ahead, we think that woes in the oil sector will ease quite gradually and the recovery in non-oil activity will continue to fade. Base effects created by last year’s slump will be less favourable.
“And while oil production problems are likely to be worked through over the coming quarters, the softening of growth in the non-oil economy will probably push the headline GDP growth rate down further.”
According to Capital Economics, Nigeria’s economy is likely to expand by a modest 2.8 per cent over this year as a whole, and pick up only slightly in 2022.