Economy still weak as GDP grows 1.81% in Q3
Experts yesterday said Nigeria’s economy is still fragile as Gross Domestic Product (GDP) grew by 1.81 per cent (yearon-year) in real terms in the third quarter of 2018.
The GDP report released, yesterday, by the National Bureau of Statistics (NBS) showed that when compared to the third quarter of 2017 which recorded a growth of 1.17 per cent, there was an increase of 0.64 per cent points.
Analysis showed that the second quarter of 2018 had a growth rate of 1.50 per cent showing a rise of 0.31 per cent points.
Daily Trust further observed that quarter on quarter, real GDP growth was 9.05 per cent.
In the third quarter of this year, aggregate GDP stood at N33.37 trillion in nominal terms, a performance that is higher when compared to the third quarter of 2017 which recorded a GDP aggregate of N29.38 trillion, thus, presenting a positive year on year nominal growth rate of 13.58 per cent.
This growth rate is higher relative to growth recorded in the third quarter of 2017 by 2.88 per cent points and higher than the preceding quarter by 0.01 per cent points with growth rates of 10.70 per cent and 13.57 per cent respectively.
For clarity, the Nigerian economy has been classified broadly into the oil and nonoil sectors.
The nation in the third quarter of 2018 recorded an average daily oil production of 1.94 million barrels per day (mbpd), lower than the daily average production of 2.02mbpd recorded in the same quarter of 2017 by -0.08mbpd but higher than that of the second quarter of 2018 production volume 1.84mbpd by 0.10mbpd.
Real growth of the oil sector was -2.91per cent (year-onyear) in Q3 2018 indicating a decrease of -25.94 per cent points relative to rate recorded in the corresponding quarter of 2017.
Growth increased by 1.04 per cent points when compared to Q2 2018 which was -3.95 per cent.
Quarter-on-Quarter, the oil sector recorded a growth rate of 19.64 per cent in Q3 2018.
The oil sector contributed 9.38 per cent to total real GDP in Q3 2018, down from figures recorded in the corresponding period of 2017 and up compared to the preceding quarter, where it contributed 9.84 per cent and 8.55 per cent respectively.
Meanwhile, the non-oil sector grew by 2.32 per cent of in real terms during the reference quarter and this is higher by 3.08 per cent points compared to the rate recorded same quarter of 2017 and 0.28 per cent point higher than the second quarter of 2018.
The report stated that this sector was driven this quarter mainly by information and communication. Other drivers were agriculture, manufacturing, trade, transportation and storage and professional, scientific and technical services.
In real terms, the nonoil sector contributed 90.62 per cent to the nation’s GDP, higher from that recorded in the third quarter of 2017 recorded as 90.16 per cent and lower than the second quarter of 2018 recorded as 91.45 per cent.
Reacting to the latest GDP report, the Abuja Chamber of Commerce and Industry (ACCI) said the Federal Government can sustain the latest growth in the economy by leveraging on the nonoil sector and the private sector specifically to grow the economy.
Speaking on the Q3 GDP report released, yesterday, by the NBS, the president of the chamber, Prince Adetokumbo Kayode, said the growth recorded may not be unconnected to the Federal Government’s efforts to diversify the economy away from oil to the non-oil sector.
Prince Kayode said the only way Nigeria could sustain this growth is to industrialise and develop Small and Medium Enterprises to spur further growth in the economy.
“Our economy has grown by 1.8 per cent this year. That was the projection and the projection was right. But that is not enough. We need to grow by like 4 per cent next year but we cannot achieve that by folding our arms. The private sector is the critical part of it; it is not government that will grow the economy alone,” he said.
He predicted that the Nigerian economy will grow to 4 per cent in 2019 and thereafter return to over 6 per cent where it was before recession set in.
“I absolutely have confidence that we can do it. All we need is for government to understand that they must partner with the private sector. Government trying to run the business alone is never going to work,” he said.
Prince Kayode said government does not run the economy but the private sector as the former should only create the enabling environment for businesses to thrive.
But in spite of the positive growth in Nigeria’s Gross Domestic Product (GDP) since Nigeria exited recession, an economic expert said the growth is still weak and fragile.
Prof. Uche Uwaleke, Head of Department, Nasarawa State University Keffi, said indeed it marked an end to the downward trend in GDP growth noticed since the first quarter of this year.
Of note he said, “is the performance of the nonoil sector where marginal improvements were recorded in manufacturing, especially cement production, transportation and agriculture.”
He noted that “this outcome may have been helped by the implementation of the 2018 budget which kicked-in at the beginning of the third quarter, the relative stability in the exchange rate as well as the CBN’s interventions in the real sector.”
He however noted that “the growth is still weak and fragile particularly with respect to the sectors that have strong linkages to jobs. The performance of the financial services sector which is critical to the economy is disappointing,” he said.
He suggested that “going forward, there is the need to vigorously implement the capital component of the 2018 budget, invest more in education and health sectors which are lagging behind, tackle the incessant farmersherdsmen clashes weighing down on food production and enhance access to credit by target beneficiaries of the various CBN intervention schemes.”
“Overall, improvement in the ease of doing business will go a long way in increasing the risk appetite of financial institutions in Nigeria which will positively rub off on GDP growth,” he noted.