November 18, 2021/Coronation Report

The national accounts for Q3 ‘21 by the National Bureau of Statistics (NBS) show that GDP grew by 4.0% y/y compared with 5.0% y/y recorded in Q2 ‘21. This is slightly above our expectation (by 20bps) of 3.8% y/y. We note that the 4.0% y/y growth for Q3 is partly attributed to steady progress in stemming the spread of the coronavirus and the resumption of economic/business activity. Furthermore, positive base effect contributed to the growth figure. 

• The oil economy contracted by -10.7% y/y in Q3 compared with a contraction of -12.7% y/y recorded in the previous quarter. Based on data from the NBS, average crude oil production in Q3 was 1.57mbpd, compared with 1.61mbpd in the previous quarter and 1.67mbpd in Q3 ‘20.  
• Meanwhile, the non-oil economy grew by 5.4% y/y compared with growth of 6.7% y/y recorded in Q2. Key drivers were finance and insurance (23.2% y/y), transport and storage (20.6% y/y), trade (11.9% y/y), telecommunications (10.9% y/y), manufacturing (4.3% y/y), construction (4.1% y/y), real estate (2.3% y/y), as well as agriculture (1.2% y/y). 
• Agriculture increased by 1.2% y/y compared with 1.3% y/y recorded in Q2. Crop production was the major driver of the sector and accounted for 87% of agriculture GDP, the segment grew by 1.4% y/y. We also note that the livestock and forestry segments grew by 0.1% y/y and 1.9% y/y respectively while fisheries contracted by -3.9% y/y. The agriculture sector contributed 29.9% to real GDP in Q3 ‘21. The sector’s underperformance can be partly hinged upon insecurity in specific farming areas, storage and logistics challenges, among others.   
• Telecommunications posted growth of 10.9% y/y compared with 5.9% y/y recorded in Q2. We see the sector achieved double-digit growth in Q3, similar to the growth pattern it enjoyed for most of 2020. The ongoing remote working triggered by the pandemic has supported growth in this sector. Entertainment via streaming services have picked up significantly and has also contributed to the sector’s growth.  
• In Q3, real estate and construction grew by 2.3% y/y and 4.1% y/y respectively. The growth registered for both sectors could be attributed to development activities on the back of recommencement of delayed projects which were paused due to the slowdown triggered by the pandemic. 
• The manufacturing sector posted growth of 4.3% y/y in Q3 compared with 3.5% y/y recorded in Q2. Within the sector, the food and beverages segment grew by 6.1% y/y, (accounting for 50% of total manufacturing GDP) compared with 4.9% y/y recorded in Q2. While the textile, apparel and footwear segment grew by 1.0% y/y. The cement segment grew by 5.7% y/y in Q3. Over the past five months, consumption patterns have been relatively better compared with Q3 ‘20. This bodes well for the manufacturing sector. Furthermore, fx liquidity which has a direct impact on imported manufacturing input has been relatively stable