Good tidings on the economy

The report by the National Bureau of Statistics (NBC) on Monday indicating that the nation’s economic growth rose to an annual rate of 2.55 per cent in the three months to the end of December 2019, its highest quarterly growth since a 2016 recession, without a doubt, gives cause for cheer and a pointer towards a buoyant economy. Although, the growth is marginal, the economic outlook is quite re-assuring and bright, considering the fact that revamping of the economy is one the three pillars of the Buhari government; the others are the fight against corruption and insecurity.

According to the report, the economy expanded by 0.27 per cent in the previous quarter and 0.17 per cent in the same period a year earlier. Growth rose to an annual rate of 2.28 per cent in the third quarter after production of the nation’s main export, crude oil, rose to a more than three-year high. Crude production in the fourth quarter stood at 2 million barrels per day, up from 1.91 million in the same period of the previous year.

Special Adviser to the President on Economic Matters, Dr. Adeyemi Dipeolu, in a statement said “The Gross Domestic Product (GDP) grew by 2.55 per cent (year-on year), in Q4 2019. This reflects an increase of 0.17 per cent over Q4 2018 (2.38 per cent). This figure is also an increase of 0.27per cent compared to the preceding quarter (Q3 2019). Aggregate GDP stood at N39.5 trillion while in real terms, GDP is at N19.53 trillion in Q4 2019. The growth in Q4 2019 is the highest rate since Nigeria came out of the recession in 2017.

This feeds into the estimated overall GDP growth for 2019 which is 2.27 per cent. This represents an increase on 2018’s growth rate of 0.36per cent and shows an improving trend since the recession, of increasing growth in GDP. The non-oil sector contributed 92.68 per cent to GDP in the period with the oil sector contributing 7.32 per cent. While the oil sector has seen an undulating trend over the past few years, the non-oil sector has a more stable and slightly upward growth trajectory. The non-oil sector’s contribution is on the back of agriculture 26.1 per cent, industries 20.27 per cent, and services 53.64 per cent.

In the oil sector, average production was 2 million barrels per day (2mbpd) in Q4 2019. The important thing to note is that production remained consistently around this range in 2019. The real growth of the oil sector in Q4 2019 was 6.36 per cent year-on-year (6.49 per cent in Q3 2019).  For 2019, the oil sector recorded growth of 4.59 per cent (0.97 per cent in Q4 2018). The non-oil sector grew by 2.26 per cent in real terms in Q4 2019. This is a slight reduction compared with 2.7 per cent in Q4 2018, but higher than 1.82 per cent in the previous quarter.

In manufacturing, the growth is 26.29 per cent for the period, which is less than 33.57 per cent and 39.69 per cent in Q4 2018 and Q3 2019 respectively. Sector contribution is 11.37 per cent, which is higher than the same period in 2018. Real GDP growth was 1.24per cent (year on year). The information and communication sector (telecommunication mainly) recorded growth of 9.86 per cent in the period, which is lower than 14.82 per cent and 10.99 per cent in Q4 2019 and Q3 2018, respectively. Sector contribution in 2019 was 10.68 per cent which is higher than the same period in 2018. Real GDP growth was 8.5 per cent.Finance and services sector grew at 23.3 per cent in nominal terms. This is higher than the preceding quarter and the similar period in 2018. The sector’s annual contribution in 2019 was 2.93 per cent. In real terms, this growth was at 20.18 per cent. Economic growth is reflective of a healthy economy and points to the policies of government towards specific priority sectors. The report shows that Nigeria is growing, even higher than some international analysts had predicted.

This growth can be attributed to the robust policies of the government to diversify the economy, renewed security efforts/reduced vandalism of pipelines, and improved consumption/production of local goods (rice), etc. Overall, the Nigerian economy performed reasonably despite external shocks, internal issues (border closure), tightening of monetary policy, and the Central Bank of Nigeria’s continued defense of the Naira. There is also some improvement expected going forward with less volatility in oil prices, reduced effect of disease on crops (Lassa fever), more support to SMEs, early passage of the budget and continued diversification of the economy.”

Blueprint welcomes the report but with a caveat that it not yet uhuru as the growth in the economy is quite sluggish and consequently not reflective of the living standard of the mass of the people, which is still abysmally poor. We, therefore, urge the Buhari administration to continue to drive the economy towards further growth and shared prosperity, because as the president said recently “the economy is the most delicate and sensitive of all aspects of national life.”

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