How NBS determined Nigeria’s exit from recession
The National Bureau of Statistics (NBS) relied on international standards outlined under the United Nations Statistics Division (UNSTATS) to determine how Nigeria exited recession in the second quarter of 2017.
Recently, the NBS reported that Nigeria recorded a positive Gross Domestic Product (GDP) growth of 0.55 per cent in the second quarter of this year.
The report was received with mixed feelings, including allegations of politicisation of the NBS, a development the Statistician General of the Federation, Dr. Yemi Kale, has since refuted.
In economics, GDP is computed as gross output minus intermediate consumption to determine the value of all goods and services produced over a specific time period.
Globally, GDP is used to know the size of the economy of different countries as the value is in dollar terms.
Daily Trust took a look into the methodology with which the NBS compiled the GDP report for the second quarter and discovered that certain methodological pillars underpinned the GDP compilation.
These include the System of National Accounts (SNA, 2008 version), the International Standard Industrial Classification (ISIC, Revision 4.0), and the Central Product Classification (CPC, version 2).
The System of National Accounts (SNA, 2008 version) is the internationally agreed standard of recommendations as to how to compile measures of economic activity while the International Standard Industrial Classification (ISIC, Revision 4.0) is the international reference for the classification of productive activities.
“Its main purpose is to provide a set of activity categories that can be used for the collection and reporting of statistics according to such activities,” the NBS stated in its methodological notes.
The Central Product Classification (CPC, version 2) is based on the physical characteristics of goods or on the nature of services rendered.
The CPC covers products that are output of economic activities and data for this analysis were obtained from the Quarterly Establishment Survey (QES) conducted by the National Bureau of Statistics (NBS), tax receipts from the Federal Inland Revenue Service (FIRS), and other administrative sources such as the Nigerian National Petroleum Corporation (NNPC).
The GDP report for second quarter covered activities at current constant (2010) prices.
These economic activities are broadly classified as the 46 and agriculture; mining and quarrying; manufacturing; electricity, gas, steam and air conditioning supply; water supply, sewerage, waste management and remediation; trade; construction; accommodation and food services; transportation and storage; information and communication as well as telecommunication and information services.
Other activities included arts entertainment and recreation; finance and insurance services; real estate; professional scientific and technical services; administrative and support services; public activities; education; human health and social services and other service activities.
Most of these broad economic activities have sub economic activities. For instance, under agriculture, the NBS included crop production, livestock production, forestry and fishing as sub economic activities.
To demonstrate the computation of the GDP of crude petroleum and natural gas bearing in mind that GDP is computed as gross output minus intermediate consumption, the NBS identified gross output as the quantity of crude petrol produced (barrels) and natural gas in million cubic feet multiplied by the average price in domestic currency, which is the equivalent of the price in dollar during the accounting period.
The intermediate consumption is identified as purchase of consultancy services, transportation, electricity bills, water bills, cost of fuel used, and other expenditures.
The value of the gross output subtracted from the value of the intermediate consumption gives the GDP of crude petroleum and natural gas and the same method is also applied for all the 46 economic activities tracked by the NBS.
Note that gross output should be greater than intermediate consumption for the economy to be said to be healthy and positive. Nigeria recorded a positive growth in the second quarter from the computation, signalling formal exit from recession.