According to PricewaterhouseCoopers, Nigeria’s real Gross Domestic Product will grow 2.0 percent in 2018, propelled by increase in oil production and government spending
By Anayo Ezugwu
PricewaterhouseCoopers, PwC, Nigeria has said that Nigeria’s real Gross Domestic Product, GDP, will grow at 2.0 percent year-on-year in 2018. PwC Nigeria said stability in oil production and increased spending by the government will support the real GDP growth.
The firm in its latest economic alert said they expect significantly higher oil sector growth in the first quarter of 2018 due to base effects. Similarly, PwC Nigeria expects increased government and pre-election spending to boost the weak consumer spending. “However, we note that growth may be offset by a slowdown in investments due to the uncertainty usually associated with elections in Nigeria.
“Despite our expectation of stronger growth in 2018, we believe the prolonged delay in implementing overdue reforms in the economy will continue to drag growth. These include: slow progress with the power sector reforms, absence of full deregulation of the downstream petroleum sector and the multiplicity of exchange rates which constrains investments and makes the economy vulnerable to shocks in the oil sector. Hence, growth will remain considerably below the long-term economic and population growth rates of 6.7 percent and 2.7 percent respectively,” it stated.
PwC Nigeria is equally impressed by the growth rate recorded in the non-oil sector in 2017. It stated that Nigeria’s economy consolidated its ongoing recovery in fourth quarter of 2017, as real GDP expanded by 1.9 percent year-on-year, the highest quarterly growth since fourth quarter of 2015.
“This was driven by the non-oil sector which rose 1.3 percent year-on-year, the highest in eight quarters, reflecting strong improvements in the agriculture, manufacturing and services sectors (92.6 percent of GDP). Meanwhile, the oil sector received a boost from 150,000 barrels per day increase in oil production to 1.9 million bpd, expanding 8.3 percent year-on-year. In full year terms, real GDP increased 0.8 percent year-on-year in 2017, largely in line with our estimate of 0.7 percent year-on-year.
“Agriculture GDP increased by 4.2 percent year-on-year in fourth quarter of 2017 (third quarter 2017: 3.0 percent year-on-year), as a result of improvements in crop production (89.8 percent of agriculture output). Agriculture output generally two peaks in fourth quarter, a reflection of the crop harvest season, specifically for tubers and grains.
“Also, this would partly provide an explanation for the sharp moderation in the monthly increase in food inflation in fourth quarter of 2017. Agriculture’s contribution to real GDP growth at 1.1 percent was the highest in five quarters.
“The manufacturing sector advanced by a marginal 0.1 percent year-on-year (third quarter 2017: -2.9 percent year-on-year), due to stronger output in the food and beverage (2.1 percent year-on-year), and textile, apparel and footwear (1.6 percent year-on-year) sectors, a reflection of modest demand from the yearend festive season.
“Similarly, manufacturing output improved at -0.2 percent year-year in 2017 (full year 2016: -4.3 percent year-on-year), the best performance in three years. This is however weaker than the 4-year annual average growth of 16.7 percent year-on-year, recorded prior to the 2015 currency crisis.
“The services sector recorded some improvement, despite declining -0.5 percent year-on-year in fourth quarter of 2017 (third quarter 2107: -2.9 percent year-on-year). This was driven by a 2.0 percent year-on-year growth in trade (third quarter 2017: -1.74 percent year-on-year), and an improvement in information and communication which contracted -1.4 percent year-on-year (third quarter 2017: -4.4 percent year-on-year). Overall, there is still some weakness in the services sector with real GDP growth at -0.6 percent year-on-year in 2017 (Full year 2016: -1.1 percent year-on-year), it stated.
– Mar. 10, 2018 @ 4:35 GMT |