How growth in agric, telecoms boosts Nigeria’s GDP to exit recession Q4 ─NBS

*Experts say the surprise rebound in the Nigerian economy, announced by the National Bureau of Statistics, means the country may recover faster than expected as the oil price and output increase this year, but analysts at FBNQuest Capital Research are of the view that consumers ‘should not assume automatically that Nigeria has exited its latest recession’

Isola Moses | ConsumerConnect

The National Bureau of Statistics (NBS), in Nigeria, has related how growth in agriculture and telecommunications sectors of the country’s economy helped to offset a sharp drop in oil production to push the Gross Domestic Product (GDP) to 0.11 percent in the fourth quarter (Q4) of 202o.

The Abuja-based Bureau discloses that the non-oil economy expanded by 1.7 percent from a year earlier, the strongest rate in four quarters, with agriculture growing 3.4 percent and telecommunications increasing 17.6 percent.

It was gathered the growth in real terms in Q4 2020 was slower than the 2.26 percent recorded in the corresponding quarter of 2019 but better than the 2.51 percent negative growth rate recorded in the preceding quarter.

According to NBS, growth in the sector was largely driven by Information and Communication (Telecommunications and Broadcasting).

Other drivers were agriculture (crop production), real estate, manufacturing (food, beverage & tobacco), mining and quarrying (quarrying and other minerals), and construction.

In real terms, the non-oil sector contributed 94.13 percent to the nation’s GDP in the fourth quarter of 2020, higher than the share recorded in the fourth quarter of 2019 (92.68 percent) and the third quarter of 2020 (91.27 percent), stated the Bureau.

The agricultural sector, in the fourth quarter of 2020, grew by 3.42 percent (year-on-year) in real terms, an increase by 1.11 percent points from the corresponding period of 2019, and an increase of 2.03 percent points from the preceding quarter which recorded a growth rate of 1.39 percent.

The sector also contributed 26.95 percent to the overall GDP in real terms in Q4 2020, higher than the contribution in Q4 2019 but lower than Q3 2020 which stood at 26.09 per cent and 30.77 percent respectively.

According to NBS, information and communication sector recorded a growth rate of 14.95 percent in real terms, an increase of 6.45 percent points over the corresponding period of 2019.

The sector contributed 15.06 percent to aggregate real GDP in Q4 2020, higher than the same quarter of the previous year in which it represented 13.12 percent and higher than the preceding quarter, in which it represented 13.47 percent.

According to experts, the surprise rebound means Nigeria may recover faster than expected as the oil price and output increase this year. It could also point to the growing importance of the non-crude sector.

Oil production fell to 1.56 million barrels a day in the fourth quarter from 1.67 million barrels in the previous three months.

While crude contributes less than 10 percent to the country’s GDP, it accounts for nearly all foreign-exchange earnings and half of government revenue in the continent’s biggest producer of the commodity.

However, analysts at FBNQuest Capital Research are of the view that since the national accounts are not seasonally adjusted and since the fourth quarter tends to be the strongest of the year due to the demand boost in the holiday season, “we should not assume automatically that Nigeria has exited its latest recession,” Nigerian Tribune report said.

The analysts said Q1 ’21 could well prove a borderline case.

The modest growth of 0.11per cent in the quarter compares with a contraction of -3.62 percent the previous quarter and 2.55 percent in the year-earlier period.

According to them, it could now be that the credit interventions of the CBN, state development banks and others in the real sector especially agriculture are starting to have an impact (although the fourth quarter is generally the sector’s best).

Economists say 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 of the CBN could start raising interest rates again to fight inflation that’s been above the target band of 6 per cent to 9 percent for more than five years. The panel eased by 200 basis points in 2020.