February 23, 2024/CSL Research
The National Bureau of Statistics (NBS) released data indicating a 2.74% GDP growth for Nigeria in 2023, lower than the 3.10% GDP growth rate in 2022 but slightly surpassing our forecast of 2.55%. Notably, in the fourth quarter of 2023, the real GDP exhibited impressive growth, reaching 3.46%, marking the highest performance for the year compared to 2.54% in the previous quarter.
This remarkable Q4 growth was predominantly driven by the non-oil sector, which demonstrated resilience with a growth of 3.07%, up from 2.75% in Q3. Key contributors to the non-oil sector’s growth were the services industry, particularly the Information and Communication Technology (ICT) and financial services sub-sectors. Furthermore, the oil sector rebounded from a four-year recession, reporting a substantial growth of 12.1% in Q4 2023.
The 2023 real GDP performance of the nation was predominantly driven by the non-oil sector (94.60% of the total GDP) showcasing a growth of 3.04% y/y, albeit at a slower pace compared to the 4.84% y/y growth observed in 2022. This deceleration in the non-oil sector’s growth during 2023 can be attributed to the adverse effects of the substantial depreciation of the Naira and the elevated costs associated with borrowing. Contrastingly, the oil sector, while contracting by 2.22% year-on-year in 2023, showed an improvement from the severe 19.22% y/y contraction witnessed in 2022.
This positive shift is attributed to the sector’s average daily oil production of 1.47 million barrels per day (mbpd) in 2023, surpassing the 1.38 mbpd recorded in 2022. Looking ahead, there is optimism as the government actively pursues initiatives to restart dormant oil wells and reactivate inactive oil terminals. This strategic approach is anticipated to result in a forecasted increase in oil output to 1.56 mbpd in 2024.
In 2023, the services sector, a key driver of the non-oil sector’s GDP performance, recorded a real GDP growth rate of 4.18% y/y. While this signifies a slight deceleration from the robust 6.66% observed in 2022, it remains a substantial contribution to the overall economic landscape. Within the services sector, the financial institution sub-segment achieved an impressive 28.86% y/y growth in 2023, a notable increase from the 17.24% reported in 2022.
In contrast, the road transport sub-segment experienced the highest negative performance, contracting by 35.91% y/y in 2023, a significant downturn from its 15.14% y/y growth in 2022. The agriculture sector displayed a mixed performance, with an overall real GDP growth rate of 1.13% y/y in 2023 from 1.88% in 2022. We forecast real GDP growth rate of 3.37% in 2024.
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