Despite Tepid Q3 GDP, FG Must Sustain Structural Reforms to Consolidate Growth
For most economic experts, including those with multilateral financial organisations like the International Monetary Fund (IMF) and World Bank, an economic growth of 1.4 per cent for Nigeria in 2017 is unimaginable. But in its characteristic manner, Niger
On the negative side, Jacobs indicated that it meant that “the growth rate may not be sustainable because productive sectoral groups performed extremely poor in Q3 recording negative growth with the Non Metallic being the biggest loser receding by -2.02per cent; followed by Motor Vehicle Assembly -1.54per cent; followed by the Basic metal, Iron and Steel that plummeted by -0.48per cent; with the Cement sub-sector following closely with -0.40per cent
In second quarter of fiscal year 2017, Nigeria, biggest economy in Africa, emerged from an economic recession which lasted about five quarters. The 0.55 per cent growth at the end of second quarter, which was later revised to 0.72 per cent was considered weak by economic analysts and there were concerns on sustainability of the growth . But three months later, the National Bureau of Statistics (NBS), disclosed that Gross Domestic Product (GDP) has again grown by 1.4 per cent, which means GDP almost doubled compared with 0.72 per cent growth recorded in the preceding quarter.
Beyond doubling its GDP, it is to the nation’s credit that it has surpassed growth projections of both the International Monetary Fund (IMF) and the World Bank for 2017.
IMF/World Bank Projections
IMF raised projections for Nigeria’s economy to grow 0.8 per cent in 2017 and also revised its growth forecast for Nigeria in 2018 to 2.3 per cent. This was contained in its January 2017 World Economic Outlook –“A Shifting Global Economic Landscape. The latest forecast for Nigeria was revised based on prospects of higher oil production due to security improvement.
The IMF growth projection for Nigeria came a week after the World Bank projected Nigeria’s GDP to grow by one per cent in 2017.
Q3 GDP
But the reality according to the Statistician General, NBS, Dr.Yemi Kale, is that Nigeria’s economic growth at three months before the end of 2017 has surpassed what both the IMF and World Bank could envisage.
“The nation’s Gross Domestic Product (GDP) grew in Q3 2017 by 1.40 per cent (year-on-year) in real terms, the second consecutive positive growth since the emergence of the economy from recession in Q2 2017. This growth is 3.74 per cent points higher than the rate recorded in the corresponding quarter of 2016 (-2.34 per cent) and higher by 0.68 per cent points from the rate recorded in the preceding quarter, which was revised to 0.72 per cent from 0.55 per cent (Q2 was revised following revision by NNPC to oil output and hence led to revision to Oil GDP). Quarter on quarter, real GDP growth was 8.97 per cent”, the NBS GDP report for third quarter 2017 disclosed.
According to the NBS GDP report, Nigeria’s aggregate GDP stood at over N29.45trillion in nominal terms higher when compared to over N26.55 trillion in Q3 2016, resulting in a Nominal GDP growth of 10.98 per cent. This growth is higher relative to growth recorded in Q3 2016 of 9.15 per cent. The report puts Nigeria’s year to date Real GDP growth at 0.43 per cent as at end of September 2017.
Analysts
Meanwhile, there are differing thoughts from experts over the improved economic growth in the third quarter period. They were, however, united in expressing no surprise at the impressive Q3 growth rate, especially with the rising fortunes of oil.
In a swift response, the World Bank stated that notwithstanding Nigeria’s positive economic growth in Q3, the country needed to address what it identified as the many fiscal challenges at the different levels of government.
The World Bank Lead Economist for Nigeria, Ulrich Bartsch, said:“In light of the continuing fiscal pressures, there is a strong need to strengthen the performance of the states through the full and sustained implementation of reforms to increase internally-generated revenues and state spending efficiency, and to strengthen state debt management and fiscal transparency.”
The bank stated that while all states have made progress on the reform measures included in the 22-point Fiscal Sustainability Plan, implementation is incomplete.
In its view, Renaissance Capital said Nigeria’s GDP growth remained on track to meet its 0.7 percent forecast for 2017 though recovery is lopsided. The