—GDP drops by 2.24%
— oil production averaged 1.63million barrels per day
— non-oil sector grew by 0.03%
—-manufacturing fell by 2.93%
Goods and services produced in Nigeria between July and September 2016 have dropped lower as the nation grapple with economic slow down. Companies and other economic agents in the country are producing far below their capacities as Nigeria’s economic slump deepened with oil production falling and factory output hard hit by shortage of foreign exchange.
Data released yesterday by the National Bureau of Statistics signed by its Statistician General Dr. Yale showed that the value of goods and services produced in Nigeria GDP, in the third quarter of 2016 contracted by 2.2 per cent in the three months through September from a year earlier, after shrinking 2.1 percent in the second quarter.
Government revenue has plunged and foreign currency became scarcer with the decline of oil prices, the country’s main export, since mid-2014, and production fell as militants in the Niger River delta blew up pipelines.
Crude production fell for the fourth consecutive quarter to 1.63 million barrels per day, from 1.69 million barrels in the three months through June, the statistics office said. The oil industry the report said contracted by 22 percent from a year earlier. The non-oil sector, which includes manufacturing, banking and agriculture, expanded 0.03 percent. Factory output contracted 4.4 percent, the third consecutive quarter of decline, and construction shrank 6.1 percent, the fifth straight quarterly contraction.
Manufacturing was “affected by the foreign-exchange volatility and depreciation of the naira,” Damilola Akinbami, an analyst at Financial Derivatives Co. in Lagos. “We saw significant injection in construction, but there is a time lag between when something is implemented and when you see the impact, that’s why we didn’t see the impact in the third quarter.”
The slump in oil and shortages of foreign currency and power could cause the economy to shrink 1.7 percent this year, according to the International Monetary Fund. That would be Nigeria’s first full-year contraction since 1991, according to data from the IMF.
Federal Government and other policy makers have assured Nigerians that the worst of the recession is over.
Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, in October assured the public that the economic recession will soon be over, given the strategic measures being put in place by the monetary and fiscal authorities to turn the economy around. Speaking in Lagos during an interactive session with journalists, Emefiele emphatically stated that the “worst is over”, adding that the Nigerian economy was already on the path of recovery. The governor equally reiterated his call for the federal government to partially sell some of its oil joint venture assets, saying that the proceeds raised from the sale would go a long way in boosting Nigeria’s foreign reserves and reflating the economy through infrastructure projects.
Emefiele also expressed optimism that the liberalisation of the foreign exchange (FX) market was starting to pay off, revealing that the country had recorded $1 billion capital Senate two weeks ago rejected the government’s spending plan for the next three years because the proposals, which were meant to boost the economy, lacked details. Lawmakers also rejected President Muhammadu Buhari’s plan to borrow $30 billion abroad through 2018 on the same grounds.
NBS report said “In the third quarter of 2016, the nation’s Gross Domestic Product (GDP) contracted by -2.24 per cent (year-on-year) in real terms. This was lower by 0.18 per cent points from growth recorded in the preceding quarter and also lower by 5.08 per cent points from growth recorded in the corresponding quarter of 2015. Quarter on quarter (unadjusted for seasonality), real GDP increased by 8.99 per cent
“During the quarter, aggregate GDP stood at N26.55895283 trillion (in nominal terms) at basic prices, compared to the third quarter 2015 value of N24.31363694 trillion. Nominal GDP grew by 9.23 per cent. This growth was higher relative to growth recorded in the third quarter of 2015 by 3.22 per cent points. The Nigerian economy can be more clearly understood according to the oil and non-oil sector classifications.”
The report said “During the period under review, oil production according to NNPC, averaged at 1.63million barrels per day (mbpd), lower from production in second quarter of 2016. Oil production was also lower relative to the corresponding quarter in 2015 by 0.54million barrels per day when output was recorded at 2.17mbpd.
“As a result, real growth of the oil sector slowed by –22.01 per cent (year-on-year) in third quarter of 2016. This represents a decline relative to growth recorded in same quarter of 2015 at 1.06 per cent. Growth declined by 23.07 per cent points and 4.54 per cent relative to growth in third quarter of 2015 and second quarter of 2016 respectively. Quarter-on-Quarter, growth was 8.07 per cent. As a share of the economy, the Oil sector contributed 8.19 per cent of total real GDP, down from figures recorded in the corresponding period of 2015 and the preceding quarter of 2016 recorded at 10.27% and 8.26% respectively.
“Growth in the Non-oil sector was largely driven by the activities of Agriculture (Crop Production), Information & Communication and Other Services. The non-oil sector grew by 0.03 per cent in real terms in the third quarter of 2016, reversing the last 2 quarters of negative growth recorded in Q1 and Q2 2016. This was 0.41% points higher from the second quarter of 2016, yet 3.03 per cent points lower from the corresponding quarter in 2015. In real terms, the Non-Oil sector contributed 91.81 per cent to the nation’s GDP, higher from shares recorded in the second quarter of 2016 91.74 per cent and the third quarter of 2015
“Four main activities make up the Mining & Quarrying sector, they are Crude Petroleum and Natural Gas, Coal Mining, Metal ore and Quarrying and other Minerals. On a nominal basis, the sector grew in the Third Quarter of 2016 by 5.65 per cent (year on year). This was substantially above growth recorded in the corresponding quarter of 2015 where growth was recorded at –33.43 per cent. This increase is attributable to the high exchange rate of the naira to the dollar in the third quarter of 2016; an average of N303 to $1 compared to the corresponding quarter in 2015 with an average of N197 to $1. The sector contributed 6.23 per cent to overall GDP during the third quarter of 2016, just minimally lower than the contribution recorded in same quarter of 2015 at 6.44 per cent, but higher than its contribution in the preceding quarter of 3.93 per cent.
“In real terms, Mining and Quarrying sector slowed by –21.64 per cent (year-on-year) in the third quarter of 2016 which was 22.77 per cent lower than rates recorded in the same Quarter of 2015, also 4.45 per cent lower than rates recorded in second quarter of 2016. The contribution of Mining and Quarrying to Real GDP in the third quarter of 2016 stood at 8.34 per cent, showing a decline of 2.06 per cent relative to the corresponding quarter of 2015 and also a decline of 0.07 per cent relative to the second quarter of 2016.
“Agriculture, in nominal terms, grew by 7.37 per cent year-on-year. This was lower than growth rates recorded in the corresponding quarter of 2015 and also lower than the preceding quarter of 2016 by 1.97 per cent and 5.87 per cent respectively. Growth in the sector was driven by output in Crop Production accounting for 95 per cent of overall nominal growth of the sector. Agriculture contributed 24.09 per cent to nominal GDP during the quarter under review. This was a little lower than shares recorded in the corresponding period of 2015 but higher than the quarter before at 24.51 per cent and 19.71 per cent respectively.
“Real agricultural GDP growth in the third quarter of 2016 stood at 4.54 per cent (year-on-year), an increase of 1.07 per cent points from the corresponding period of 2015. Growth basically remained the same when compared with the previous quarter which was recorded as 4.53 per cent. The contribution of Agriculture to overall GDP in real terms was 28.65 per cent in the quarter under review, higher by 1.86 per cent from its share in the corresponding quarter of 2015, also higher from the second quarter of this year by 6.10 per cent.
According to NBS “Nominal GDP growth of Manufacturing in the third Quarter of 2016 was recorded at –2.93 per cent (year-on-year), 7.73 per cent lower than the 4.80 per cent recorded in the corresponding period of 2015. This is partly due to the continued fall in the exchange rate, which makes imported inputs more expensive, thereby increasing business costs. This is greatly as a result of continued fall in naira to dollar rate which translates to a much higher cost of business operations. Growth also reflected a drop from the second quarter of 2016 by 1.91 per cent which was recorded at –1.02 per cent. On a Quarter-on-Quarter basis, the sector grew by 8.49 per cent. Contribution of Manufacturing to Nominal GDP was 8.59 per cent in the third quarter of 2016, lower than the 9.67 per cent recorded in the corresponding period of 2015, and 8.95 per cent in the second quarter of 2016.”
It further said “In the third quarter of 2016, Real GDP growth of the manufacturing sector slowed by 2.63 per cent points to -4.38 per cent (year-on-year) from –1.75 per cent growth recorded in third quarter of 2015. Growth was 1.02 per cent lower than rates recorded in the second quarter of 2016. On a quarter-on-quarter (seasonally unadjusted) basis the sector increased by 6.28 Per cent.
“This sector recorded a nominal year on year growth of 3.97 per cent in the third quarter of 2016. This represents a growth 0.51 per cent higher than the 3.46 per cent growth rate recorded in the corresponding quarter of 2015, and 8.23 per cent higher than the growth rate of –4.26 per cent recorded in the second quarter of 2016. Quarter–on-Quarter, the sector grew by 13.53 per cent. The contribution of Electricity, Gas, Steam and Air Conditioning Supply to Nominal GDP was 0.48 per cent in the third quarter of 2016 lower by a small margin when compared to the contribution made in the corresponding quarter of 2015 recorded at 0.50 per cent.
“In real terms, the sector slowed by –6.68 per cent in 2016 third quarter, 8.81 per cent points lower than the corresponding period in 2015, and higher by 3.79 per cent than the second quarter 2016 growth rate, which stood at –10.46 per cent.
Quarter-on-Quarter, the sector grew by 8.65 per cent. The contribution of Electricity, Gas, Steam and Air Conditioning Supply to real GDP in the third quarter of 2016 recorded as 0.33 per cent minimally lower than the third quarter of 2015 at 0.34 per cent, but maintaining the same rate contributed in the second quarter of 2016.”
