May 24, 2023/Coronation Report
The national accounts for Q1 ‘23 by the National Bureau of Statistics (NBS) show that GDP grew by 2.3% y/y compared with the 3.5% y/y recorded in Q4 ’22. Meanwhile, on a q/q basis, it contracted by -15.7%, reflecting slower economic activity compared with the preceding quarter. The slowdown in growth can be largely attributed to the impact of the naira scarcity (especially in the informal sector) amid elevated production costs.
- Oil’s formal share of real GDP was 6.2% vs 4.3% recorded in Q4 ’22. Meanwhile, it contracted (for the twelfth consecutive quarter), by -4.2% y/y in Q1 ‘23, compared with -13.4% y/y recorded in Q4 ‘22. Based on data from the NBS, average crude oil production in Q1 ‘23 was 1.51mbpd compared with 1.34mbpd in the previous quarter and 1.49mbpd in Q1 ‘21. The improvement in crude oil production can be partly attributed to the sustained efforts by the FGN towards tackling crude oil theft and vandalism.
- The non-oil economy grew by 2.8% y/y in Q1 ‘23 vs 4.4% y/y in Q4 ‘22. Key drivers within the non-oil economy include finance and insurance (21.4% y/y), telecommunications (11.7% y/y), transportation and storage (9.4% y/y), construction (3.3% y/y), real estate (1.7% y/y), manufacturing (1.6% y/y) and trade (1.3% y/y). Combined, these sectors account for 50.4% of total GDP in Q1 ‘23.
- Agriculture contracted by -0.9% y/y in Q1 ’23 vs a growth of 2.1% y/y recorded in the preceding quarter. The contraction can be partly attributed to the cash crunch which compelled farmers to dispose harvests at discounted prices. Other factors such as elevated prices of farm inputs, insecurity as well as storage and logistics difficulties continue to impact the sector. Crop production remained the major driver of the sector and accounted for 89.9% of agriculture GDP, it grew by 1.9% y/y. The forestry and fisheries segments grew by 1.3% y/y and 0.9% y/y respectively. However, the livestock segment contracted by -2.9% y/y. Agriculture contributed 26.5% to real GDP in Q1 ‘23.
- Telecommunications posted growth of 11.7% y/y compared with 11.2% y/y recorded in Q4 ’23. The segment accounted for 14.1% of total GDP in Q1 ’23. Additionally, trade grew by 1.3% y/y in Q1 ’23 vs 4.5% y/y recorded in the preceding quarter reflecting the impact of the recent cash crunch on trading activities in the country.
- Finance and insurance posted growth of 21.4% y/y in Q1 ’23 compared with 11.6% y/y recorded in Q4 ’22. This is reflective of the increased adoption of online banking platforms in light of the CBN’s cashless policy drive.
- In Q1 ‘23, the manufacturing grew by 1.6% vs 2.8% y/y recorded in Q4 ‘22. Within the sector, the food and beverages segment grew by 3.9% y/y and accounted for 50.6% of total manufacturing GDP. Meanwhile, the textile, apparel, and footwear segment contracted by -3.7% y/y. Cement posted a growth of 1.6% y/y.
- Looking ahead, we expect to see a slight improvement in Q2 ’23 GDP figures, given the significant reduction in cash circulation hiccups.
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