In the second quarter of 2020, ending 30 June, Nigeria’s Gross Domestic Product (GDP) decreased by 6.10% (year-on-year) in real terms, ending the 3-year trend of low but positive real growth rates recorded since the 2016/17 recession. This is according to the GDP Report released by the National Bureau of Statistics (NBS).
The Q2 2020 growth rate indicates a drop of 8.22% points, when compared with Q2 2019, which recorded a growth rate of 2.12%.
GDP declined by 7.97% points when compared to the first quarter of 2020 which recorded a growth of 1.87%.
According to NBS report only 13 activities recorded positive real growth in the second quarter compared to 30 in the preceding quarter.
In nominal terms, aggregate GDP stood at N34.023 trillion in the quarter in review. This is 2.8% lower than the second quarter of 2019 (N35.002 trillion).
The decline was largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.
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The Minister of Finance at the National Economic Council Meeting held on Thursday 21 May, 2020, said that the Nigerian Economy could shrink by as much as 8.9% in 2020 because of the COVID-19 pandemic. The trend of Nigerian GDP growth rate has been in a continuous decline since 2002 when it recorded a 14.60% growth rate.
Contributions to Real GDP in broad category
- Oil Sector – 8.93%
- Non-oil sector – 91.07%
Further breakdown of contributions to Real GDP
- Agriculture – 24.65%
- Industries – 21.87%
- Services – 53.49%
More detailed analysis
The Oil sector contributed 8.93% to total real GDP in Q2 2020, down from figures recorded in the corresponding period of 2019 and the preceding quarter, where it contributed 8.98% and 9.50% respectively.
Real growth of the oil sector was –6.63% (year-on-year) in Q2 2020 indicating a decrease of –13.80% points relative to the rate recorded in the corresponding quarter of 2019. Growth decreased by –11.69% points when compared to Q1 2020 which recorded 5.06%.
In real terms, the Non-Oil sector accounted for 91.07% of aggregate GDP in the second quarter of 2020, slightly higher than the share recorded in the second quarter of 2019 (91.02%) as well as the first quarter of 2020 (90.50%).
The non-oil sector declined by –6.05% in real terms during the reference quarter (Q2 2020). It was the first decline in real non-oil GDP growth rate since Q3 2017. The recorded growth rate was –7.70% points lower compared to the rate recorded during the same quarter of 2019, and –7.60% points compared to the first quarter of 2020.
Transport and Storage, Accommodation and Food Services, Construction, Education, Real estate and Trade among others experienced the highest negative growth.
Source – NBS
Agriculture contributed 24.65% to aggregate real GDP in Q2 2020, higher than the contributions in the second quarter of 2019 and the first quarter of 2020 which stood at 22.78% and 21.96% respectively.
Four sub-activities make up the Agricultural sector: Crop Production, Livestock, Forestry and Fishing. Crop Production remained the major growth driver of the sector, as it accounted for 87.34% of nominal GDP in the sector in Q2 2020.
In real terms, the agricultural sector grew by 1.58% (year-on-year) in the second quarter of 2020, a decrease of –0.21% points from the corresponding period of 2019, and –0.62% points from the preceding quarter
The contribution of Mining and Quarrying to real GDP in the quarter under review stood at 9.08%, lower than the rate of 9.12% recorded in the corresponding quarter of 2019 and the 9.54% recorded in the first quarter of 2020 respectively
Real GDP in the Mining and Quarrying sector decreased by –6.60% (year-on-year) in the second quarter of 2020. Compared to the same quarter of 2019 and first quarter 2020, it was lower by -13.60% points and –11.18% points respectively.
The Mining & Quarrying sector consists of Crude Petroleum and Natural Gas, Coal Mining, Metal ore and Quarrying and other Minerals sub-activities. Crude Petroleum and Natural gas was the main contributor to the sector with a weight of 97.53% in Q2 2020
Manufacturing contributed 8.82% to the GDP in real terms in Q2 2020, lower than the 9.08% recorded in second quarter of 2019 and the 9.65% recorded in the first quarter of 2020.
In Q2 2020, real GDP growth in the manufacturing sector was –8.78% (year on year), lower than the same quarter of 2019 and the preceding quarter by –8.64% points and –9.21% points respectively.
Construction contribution to total real GDP was 3.23% in the second quarter of 2020; lower than its contribution of 4.45% in the same quarter of the preceding year, and lower than in the immediate past quarter where it contributed 4.08%
The real growth rate of the construction sector in the second quarter of 2020 was recorded at –31.77% (year on year), lower by –32.43% points from the rate recorded the previous year.
Trade contributed 14.28% to GDP in real terms in Q2 2020, lower than the 16.07% it represented in the previous year, and the 16.08% recorded in Q1 2020.
In real terms, Trade’s year on year growth stood at –16.59%, which was –16.34% points lower than the rate recorded one year earlier at –0.25%, and –13.76% points lower than the preceding quarter’s –2.82% growth rate.
Finance and Insurance contribution to real GDP totaled 4.00%, higher than the contribution of 3.17% recorded in the second quarter of 2019 by 0.83% points, and higher than 3.81% recorded in Q1 2020 by 0.20% points.
Growth in this sector in real terms totaled 18.49%, higher by 20.73% points from the rate recorded in 2019
second quarter, but down by –2.30% points from the rate recorded in the preceding quarter.
The Finance and Insurance Sector consists of the two subsectors, Financial Institutions and Insurance,
which accounted for 89.82% and 10.18% of the sector respectively in real terms in Q2 2020.
Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of the country’s economic health.
Real GDP takes into account the impact of inflation and allows comparisons of economic output from one year to the next and other comparisons over periods of time.
The impact of the Coronavirus Pandemic was not seen on the Q1 2020 GDP, as the pandemic became global (including Nigeria) towards the second half of March 2020. We expect to see a steep decline in GDP by the second quarter.