February 23, 2024/InvestmentOne Report
Please click to download our Q4 2023 GDP Update
- Nigeria’s GDP growth has remained in positive territory in recent quarters despite the enormous challenges facing the nation amid various policy reforms and implementations. In specifics, the newly released Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS) revealed that the Nigerian economy grew by 3.46% y/y in real terms in the fourth quarter of 2023, below 3.52% y/y in the corresponding quarter of 2022 but higher than 2.54% in the preceding quarter.
- In the oil sector, a substantial recovery was seen after the consistent decline in the last sixteen quarters as growth rate printed at 12.11% y/y in Q4 2023, compared to the contraction of about 13.38% and 0.85% recorded in Q4 2022 and Q3 2023, respectively. The oil sector has been faced with various challenges such as crude oil theft and pipeline vandalism which have contributed to the divestments of International Oil Companies (IOCs) from the shores of Nigeria and low crude oil production, keeping the sector in contraction.
- Elsewhere, growth rate in the non-oil sector increased by 32bps on a quarterly basis to 3.07% in Q4 2023, but lower than 4.44% printed in the same quarter in 2022. This is on the back of the stringent policy adjustments adopted around the foreign exchange market which led to a significant decline in the value of the Naira since the new government assumed office in June 2023. However, the services sector was the primary driver of growth in the fourth quarter with a growth rate of 3.98% and a contribution of 56.55% to total GDP.
- Going forward, we expect the Nigerian economy to continue its northward movement in 2024 albeit at a moderate pace given the prevailing challenges facing the economy. Specifically, we expect a formidable growth rate in Q1 2024 which should be mostly driven by low base effect. For the full year 2024, we posit that the expected positive performance will be propelled by the non-oil sector as the economy continues to adjust to policy reforms. We expect this growth to be buoyed by further expansion in the financial services space given the elevated interest rates which should support their financial performance in the year.
