The Nigerian economy continues to grapple with challenges as the food, textile, and 24 other sectors face a staggering loss of over N1 trillion in the second quarter of 2023. A detailed analysis of the Gross Domestic Product (GDP) data provided by the Nigerian Bureau of Statistics reveals a concerning trend, with twenty-six sectors experiencing contraction during this period.
These sectors collectively shed N1.16 trillion in economic value, witnessing their combined contribution to real GDP shrink from N7.69 trillion in the first quarter to N6.54 trillion in the second quarter of 2023. The sectors adversely affected include fishing, crude petroleum and natural gas, cement, food, beverage and tobacco, textile, apparel and footwear, wood and wood products, pulp, paper and paper products, non-metallic products, basic metal, iron and steel, motor vehicles and assembly, other manufacturing, construction, accommodation and food services, road transport, and air transport.
Additional sectors that experienced a negative impact during Q2 2023 were post and courier services, publishing, motion pictures, sound recording and music production, arts, entertainment and recreation, financial institutions, real estate, professional, scientific and technical services, education, other services, metal ores, and plastic and rubber products.
The recently released GDP results by the Nigerian Bureau of Statistics indicate a slight increase in real GDP by 0.20 percentage points, reaching 2.51 per cent in Q2 2023, compared to the 2.31 per cent recorded in Q1 2023. This growth rate, however, remains lower than the 3.54 per cent seen in the second quarter of 2022, reflecting the ongoing challenges faced by the economy.
According to the NBS, the growth slowdown could be attributed to the challenging economic conditions prevailing in the country. Despite the quarter-on-quarter growth of 0.20 percentage points, Nigeria’s economy struggles to breach the 3 per cent threshold due to rising inflation, which soared to 22.79 per cent in June, further pressuring purchasing power.
These economic setbacks are in contrast to the projections made by the International Monetary Fund, which anticipated a growth rate of 3.2 per cent for Nigeria in 2023. The decline in economic activity has been linked to recent reforms, including the removal of fuel subsidies and the unification of exchange rates, causing short-term discomfort and impacting various sectors.
The Manufacturers Association of Nigeria reports that businesses, particularly manufacturers, have been compelled to reduce their workforce due to the current harsh economic environment and decreased productivity. As the economy navigates these challenging times, stakeholders express concerns that the impact of economic reforms continues to hinder GDP growth and stability.
Published by: MarketNewsNG