By Jeph Ajobaju, Chief Copy Editor
Nigeria’s economy surprisingly exited recession in the fourth quarter of 2020 (Q4 2020), rebounding as restrictions to curb the spread of coronavirus were relaxed.
Gross domestic product (GDP) grew 0.11 per cent in the three months through December from a year earlier, compared with a decline of 3.6 per cent in the third quarter, the National Bureau of Statistics (NBS) said on Thursday.
The lift in Q4 2020 came after two consecutive quarters of negative growth which resulted the country’s second recession in four years.
Nigeria’s GDP “grew by 0.11 per cent (year-on-year) in real terms in the fourth quarter of 2020 (Q4 2020), representing the first positive quarterly growth in the last three quarters,” the NBC report said.
“Though weak, the positive growth reflects the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters.
“As a result, while the Q4 2020 growth rate was lower than growth rate recorded the previous year by -2.44 percentage points, it was higher by 3.74 percentage points compared to Q3 2020.
“On a quarter on quarter basis, real GDP growth was 9.68 per cent indicating a second positive consecutive quarter on quarter real growth rate in 2020 after two negative quarters.
“Overall, in 2020, the annual growth of real GDP was estimated at –1.92 percent, a decline of -4.20 percentage points when compared to the 2.27 per cent recorded in 2019.”
The NBS added that
· An average daily oil production of 1.56 million barrels per day (mbpd) was recorded in Q4; which was 0.11mbpd lower than the output in Q3.
· On a year-on-year basis, the oil sector grew -19.76 per cent.
· In 2020, the oil sector grew at -8.89 per cent compared to 4.59 per cent in 2019.
· The oil sector contributed 5.87 per cent to total real GDP in Q4 2020.
The non-oil sector grew 1.69 per cent in real terms in Q4 2020, slower than the 2.26 per cent recorded in Q3 2019, but better than the -2.51 per cent growth rate recorded in Q3 2020.
For full year 2020, however, the non-oil sector grew -1.25 per cent compared to 2.06 per cent in 2019.
In real terms, the non-oil sector contributed 94.13 per cent to GDP in Q4 2020, higher than the figures for Q4 2019 (92.68 per cent) and Q3 2020 (91.27 per cent).
The non-oil sector contributed 91.84 per cent to real GDP in 2020, higher than the 91.22 per cent in 2019.
Nigeria’s economy may recover faster
The median estimate of five economists in a Bloomberg survey was for a quarterly decline of 1.86 per cent. The economy contracted 1.92 per cent for the full year, the most since at least 1991, according to International Monetary Fund (IMF) data.
Bloomberg explained that the surprise rebound means Africa’s largest economy may recover faster than expected as the oil price and output increase this year.
It could also point to the growing dominance of the non-crude sector, according to Joachim MacEbong, a senior analyst at SBM Intelligence in Lagos.
Oil production fell to 1.56 mbpd in the fourth quarter from 1.67 million barrels in the previous three months.
While crude contributes less than 10 per cent to the country’s GDP, it accounts for nearly all foreign exchange earnings and half of government revenue in continent’s biggest producer of the commodity.
The government’s forecast for growth of 3 per cent this year is double that of the IMF.
A stronger recovery could ease pressure on the central bank to stoke activity, paving the way for a renewed focus on its price stability mandate.
That means the monetary policy committee could start raising interest rates again to fight inflation that’s been above the target band of 6 per cent to 9 per cent for more than five years. The panel eased by 200 basis points in 2020.
