In the first quarter of 2020, ending 31st March, Nigeria’s Gross Domestic Product (GDP) grew by 1.87% Year-on-Year (YoY) in real terms, although it was slower than the YoY growth of 2.10% recorded in Q1 2019. This is according to the GDP Report released earlier today by the National Bureau of Statistics.
Quarter-on-Quarter (QoQ), the real GDP growth was -14.27%, a huge drop from the 5.59% QoQ growth recorded in Q4 2019.
Fig 1: Real GDP Growth on Quarterly Interval
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% 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.
Fig 2: Real GDP Growth on Yearly Interval
The Service Sector, which includes transport, information & telecommunications, hospitality, financial services, real estate, utilities, professional services, education, arts & entertainment etc. was the biggest contributor to the Q1 2020 GDP, followed by the Agricultural Sector which includes crop production, livestock, forestry and fishing.
Fig 3: Sector Contribution to the GDP in Q1 2020
The Oil and Gas sector is the biggest contributor to the Government revenue and foreign exchange. In the calculation of the GDP, the National Bureau of Statistics places the Oil and Gas sector under “Industry” together with solid minerals sector, and manufacturing sector. Industry is the third biggest contributor to the GDP.
The Agricultural sector grew by 2.20% YoY in real terms in the quarter in review, while the Crude Petroleum & Natural Gas sub-sector (excluding refining) grew by 5.06% in real terms.
The service sector grew by 3.48% YoY, and grew by -13.32% QoQ both in real terms. The Trade sector (comprising wholesale and retail trade) contracted by -2.82% in Q1 2020 YoY, and also contracted by -13.79% QoQ, both in real terms as well.
Oil refining under manufacturing sector contracted by 52.81% in Q1 2020 from -25.71% in Q4 2019, and -49.62% in Q1 2019. The Manufacturing sector as a whole grew by 0.43% in Q1 2020 YoY, and contracted by -5.38% QoQ. All growths and contraction mentioned are in real terms.
The Finance & Insurance sub-sector recorded the biggest growths, with a 20.79% growth YoY and 2.42% growth QoQ, both in real terms.
Below is a chart showing the contributions to the overall GDP by industry, the data for the chart can be found on the website of the National Bureau of Statistics.
Fig 4: Share of Industry Contribution to the GDP in Q1 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.