May 27,2024/InvestmentOne Report
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- According to the latest Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS), Nigeria’s economy, despite facing macroeconomic challenges, maintained positive growth, expanding by 2.98% YoY in real terms for the three months ending in March 2024. This GDP growth rate surpasses the 2.31% recorded in the corresponding quarter of Q1:2023, though it falls short of the 3.46% growth observed in the preceding quarter (Q4:2023).
- In Q1:2024, Nigeria’s oil sector continued its growth trajectory, with oil production improving over the past few quarters to an average of 1.57 million barrels per day (MMbpd), up from 1.51 MMbpd in Q1:2023, marking a 3.97% year-over-year increase. However, the oil production growth rate slowed on a quarterly basis, with Q1:2024 figures showing only a marginal increase from Q4:2023’s average of 1.55 MMbpd. Despite the growth in the period, oil growth remains low due to the high base effect experienced in Q1:2023.
- Meanwhile in the non oil sector, growth was marginal in the quarter as the non oil sector expanded by 2.80% in Q1:2024 which was 2bps higher than the corresponding quarter in 2023 while it was lower than Q4:2023 growth by 28bps. The non oil sector growth was boosted by the services sub sector which contributed 58.04% and the Agriculture and Industrial subsectors which contributed 21.07% and 20.89%, respectively.
- Looking ahead, we expect the Nigerian economy to continue its growth trajectory, albeit at a moderated pace, as the lagging effects of interest rate hikes and persistently high inflation weigh on productivity and suppress income levels. The elevated interest rates have heightened borrowing costs, making it challenging for manufacturers and small businesses to secure loans due to high repayment costs in a sluggish business environment.
