August 25, 2023/Coronation Research

The national accounts for Q2 ‘23 by the National Bureau of Statistics (NBS) show that GDP grew by 2.5% y/y compared with the 2.3% y/y recorded in Q1 ’23. Meanwhile, on a q/q basis, it declined marginally -0.2%, reflective of the current hazy macroeconomic environment. 

• Oil’s formal share of real GDP was 5.3% compared to 6.2% recorded in Q1 ‘23. Meanwhile, it recorded negative growth for the thirteenth consecutive quarter, contracting by -13.4% y/y in Q2 ’23. This is a steep contraction when compared with -4.2% recorded in the previous quarter.
• Based on data from the NBS, average crude oil production in Q2 ’23 was 1.22mbpd compared with 1.51mbpd recorded in the previous quarter. The decline in crude oil production can be partly attributed to cases of oil theft, vandalism and the sabotage of critical oil installations as well as technical deficiencies in select oil terminals.
• The non-oil economy grew by 3.6% y/y in Q2 ’23 compared with 2.8% y/y recorded in Q1 ’23. Key drivers within the non-oil economy include finance and insurance (26.8% y/y), telecoms (9.7% y/y), construction (3.4% y/y), trade (2.4% y/y), manufacturing (2.2% y/y) and real estate (1.8% y/y). Combined, these sectors accounted for 46.3% of total GDP in Q2 ’23.
• Agriculture grew by 1.5% y/y after suffering a contraction in Q1 ’23. It is worth noting that insecurity in food-producing areas, elevated prices of farm inputs, and lack of efficient storage facilities continue to impact the potential growth of this sector. Crop production remained the major driver of the sector and accounted for 89.9% of agriculture GDP; it grew by 1.8% y/y. The forestry and fisheries segments also grew by 1.9% y/y and 0.3% y/y respectively. However, the livestock segment recorded another contraction (-2.3% y/y). Agriculture contributed 23% y/y to real GDP in Q2 ’23.
• Telecommunications grew by 9.7% y/y compared with 11.7% recorded in Q1 ’23. The segment accounted for 16.1% of total GDP in Q2 ’23. Furthermore, trade grew by 2.4% y/y in Q2 ’23 vs 1.3% y/y recorded in the preceding quarter.
• Finance and Insurance posted positive growth of 26.8% y/y in Q2 ’23 compared with 21.4% y/y recorded in Q1 ’23.
• Road transportation contracted by -55.1% y/y compared with a growth of 8% y/y recorded in Q1 ‘23. This can be largely attributed to the impact of the PMS subsidy removal.
• The manufacturing sector grew by 2.2% y/y vs 1.6% y/y recorded in Q1 ’23. Within the sector, the food, and beverages segment grew by 4.3% y/y and accounted for 52% of total manufacturing GDP. Meanwhile, textile, apparel, and footwear segment contracted by -4.4% y/y. The cement segment posted growth of 3.3% y/y.
• Boosting productivity to attain healthy GDP growth in Nigeria requires a comprehensive approach that addresses various key factors. Improved infrastructure will reduce production costs, enhance market access, and attract more domestic and foreign investments, fostering economic growth.  Looking ahead, our expectation is that GDP growth will be sluggish in Q3.

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