February 23, 2023/Coronation Research
The national accounts for Q4 ‘22 by the National Bureau of Statistics (NBS) show that GDP grew by 3.5% y/y compared with the 2.3% y/y recorded in Q3 ’22. For FY ’22, GDP grew by 3.1% y/y vs 3.9% y/y recorded in 2021. Our projection for FY ’22 was 3.0%, 10bps lower. The uptick in GDP growth can be largely attributed to habitual seasonal boost to demand. However, demand is still relatively soft.
- Oil’s formal share of real GDP was 4.3% in Q4 ‘22, which makes it the fifth largest sector in the economy after agriculture, trade, information & communications and manufacturing. However, through its linkages across other sectors, the indirect oil economy probably makes up at least 40% of GDP. The oil economy recorded negative growth, contracting by -13.4% y/y in Q4 vs -22.8% y/y recorded in Q3. For FY ’22, the oil sector contracted by -19.2% y/y.
- Based on data from the NBS, average crude oil production in Q4 was 1.34mbpd vs 1.20mbpd in the previous quarter and 1.50mbpd in Q4 ‘21. The marginal increase in crude oil production can be partly attributed to FGN’s recent efforts towards tackling crude oil theft and vandalism.
- For FY ’22, the non-oil economy grew by 4.8% y/y compared with 4.4% y/y recorded in 2021. Meanwhile, in Q4 alone, it grew by 4.4% y/y vs 4.3% y/y in the previous quarter. The major drivers were telecommunications, trade, agriculture, finance and insurance and manufacturing. Combined, these sectors accounted for 32.2% of total GDP in Q4.
- Agriculture accounted for 26.5% of total GDP in Q4 and grew by 2.1% y/y in the same quarter. Crop production remained the sector’s major driver accounting for 90.8% of agriculture GDP. It grew by 2.4% y/y. We also note that the livestock and fishing segments contracted by -1.6% y/y and -3.0% y/y respectively. The sector’s performance was significantly hampered by severe incidences of flood in select areas across the country.
- Telecommunications remained one of the fastest growing sector. It posted growth of 11.2% y/y and accounted for 13.5% of total GDP in Q4.
- In Q4, the manufacturing sector grew by 2.8% y/y vs a contraction of -1.9% y/y recorded in Q3 ‘22. Within the sector, the food and beverages segment posted growth of 4.9% y/y (and accounted for 49.3% of total manufacturing GDP). Meanwhile, the textile, apparel, and footwear segment contracted by -1.2% y/y. The cement segment grew by 3.9% y/y.
- Finance and Insurance was a top performer in Q4 (12.4% y/y) and posted positive growth in each quarter of 2022. Insurance, which contributed 7.2% to the sector, grew by 2.2% y/y but contracted by -10% q/q in Q4 ‘22.
- Trade is probably the best barometer for economic activity across the country. It posted growth of 5.1% y/y in Q4 vs 4.5% y/y recorded in the previous quarter.
- Looking ahead to the current quarter, we see GDP growth at 2.5% y/y in Q1 ’23.
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