Nigeria’s GDP shows resilience, grows by 2.51% in Q2 2023
…Nigerian economy still going through corrective reforms – CCPE
By Sodiq Adelakun and Seun Ibiyemi
Nigeria’s Gross Domestic Product (GDP) has displayed signs of resilience in the second quarter of 2023, growing by 2.51 per cent year-on-year in real terms.
This growth, as reported by the National Bureau of Statistics (NBS)on Friday, represents a 0.2 per cent increase from the previous quarter but a 1.03 per cent decline compared to the corresponding period in 2022.
The Services sector emerged as the primary driver of Nigeria’s GDP growth in Q2 2023, recording an impressive growth rate of 4.42 per cent. This sector contributed 58.42 per cent to the overall GDP, highlighting its significance in the country’s economic landscape
Also, the agriculture sector also experienced growth, with a 1.50 per cent increase compared to the second quarter of 2022. This improvement reflects the efforts made by the government and farmers to enhance productivity and ensure food security in the nation.
On the other hand, the industry sector faced challenges, recording a decline of -1.94 per cent in Q2 2023. However, this contraction was less severe than the -2.3 per cent decline witnessed in the same period last year.
Despite the decline in the industry sector, the overall GDP growth in Q2 2023 demonstrates Nigeria’s ability to adapt and recover from economic setbacks. The country’s diverse economic sectors contribute to its resilience, ensuring a balanced growth trajectory.
The Services sector’s robust performance can be attributed to various factors, including increased consumer spending, a rise in tourism, and the expansion of financial services. These positive developments have bolstered Nigeria’s GDP and created employment opportunities.
The agriculture sector’s growth signifies the government’s commitment to revitalising the sector and promoting self-sufficiency in food production. Initiatives such as improved access to credit, modern farming techniques, and increased investment have contributed to this positive outcome.
The decline in the industry sector raises concerns and highlights the need for targeted interventions to address the challenges faced by manufacturers and industrialists. Factors such as inadequate infrastructure, high production costs, and limited access to finance need to be addressed to stimulate growth in this sector.
Despite the challenges faced by the industry sector, Nigeria’s GDP growth in Q2 2023 indicates the country’s potential for economic diversification. By focusing on sectors such as services and agriculture, Nigeria can reduce its reliance on oil and create a more sustainable and inclusive economy.
The government’s commitment to economic reforms and policies aimed at attracting foreign direct investment (FDI) has played a crucial role in Nigeria’s GDP growth. These measures have created an enabling environment for businesses to thrive and contribute to the overall economic development of the country.
The positive GDP growth in Q2 2023 also reflects the resilience and entrepreneurial spirit of Nigerian businesses. Despite various challenges, entrepreneurs have continued to innovate, adapt, and contribute to the growth of the economy.
The COVID-19 pandemic has undoubtedly posed significant challenges to Nigeria’s economy. However, the country’s ability to rebound and record positive GDP growth demonstrates its resilience and determination to overcome adversity.
The government’s efforts to improve the ease of doing business, streamline regulations, and invest in critical infrastructure have contributed to Nigeria’s economic recovery. These measures have attracted both local and foreign investors, stimulating economic growth and job creation.
The sustained growth of Nigeria’s GDP is essential for poverty reduction and improving the standard of living for its citizens. The government must continue to prioritise policies that promote inclusive growth, reduce income inequality, and create employment opportunities.
The GDP growth in Q2 2023 also highlights the importance of data collection and analysis in informing economic policies. The National Bureau of Statistics plays a crucial role in providing accurate and timely data, enabling policymakers to make informed decisions.
To sustain and accelerate GDP growth, Nigeria must address structural challenges such as corruption, inadequate infrastructure, and limited access to quality education and healthcare. These issues hinder the country’s full economic potential and must be tackled head-on.
Collaboration between the government, private sector, and civil society is crucial for driving sustainable economic growth. By working together, stakeholders can identify and address the barriers to growth, fostering an environment conducive to investment and innovation.
Nigeria’s GDP growth in Q2 2023 should serve as a source of optimism and motivation for the country’s leaders and citizens. It demonstrates that with the right policies, investments, and collective effort, Nigeria can achieve its economic aspirations.
As Nigeria continues its journey towards economic diversification and inclusive growth, it must remain vigilant and adaptable to global economic trends and challenges. Embracing technological advancements, investing in human capital, and fostering a culture of innovation will be key to sustaining long-term economic growth.
Nigeria’s GDP growth in Q2 2023 provides a glimmer of hope for the country’s economic future. By building on the strengths of its services and agriculture sectors, addressing challenges in the industry sector, and implementing sound economic policies, Nigeria can chart a path towards sustained and inclusive growth.
In a swift response to the GDP, the Director/CEO, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf said that the Gross Domestic Product (GDP) growth [in real terms] improved marginally by 20 bases points from 2.31 per cent in the first quarter of 2023 to 2.51 per cent in the second quarter.
He said, “However, it slowed when compared to second quarter of 2022 which was 3.54 per cent. The economy slowed amid shocks from current economic reforms which impacted energy prices and the naira exchange rate.
“The adverse impacts of the reforms were disproportionately higher than expected. However, a rebound of the economy is expected in the medium to long term as current distortions in the economy are corrected. Meanwhile, there is an immediate positive outcome which is the marked improvement in the fiscal space of governments at all levels.
“Meanwhile, the dominance of the non-oil sector was underscored by the report. The sector contributed 94.7 per cent to GDP while the oil sector contributed 5.3 per cent.
“The service sector continued to maintain its dominant role in the economy with a contribution of 58.4 per cent of GDP. The structure of the economy continued to reflect its vulnerabilities, especially the challenges of productivity and competitiveness of the real economy.
The Q2 GDP growth fell short of the sub-Sahara projected average of 3.1 per cent for 2023; but better than projections for the Euro Zone of 1% and the United States of 1.8 per cent.”
Dr. Muda commenting on sectors growth, said Quarry and Minerals which grew by a staggering 39.2 per cent; financial institutions 29.2 per cent; Rail Transport, 16.9 per cent; Insurance, 7.3 per cent; Trade, 2.4 per cent; Construction, 3.5 per cent; Manufacturing , 2.2 per cent; Education, 1.4 per cent; Real Estate, 1.9 per cent; Chemical and Pharmaceutical, 6.4 per cent; Food and Beverage Sector, 4.3 per cent; Cement 3.3 per cent; Plastics, 2.7 per cent; Iron and Steel, 2.3 per cent; Agriculture, 1.5 per cent; Fishing, 0.29 per cent.
While ICT, 9.7 per cent; Air Transport, 4.3 per cent; Crop Production, 1.8 per cent; Wood and Wood products, 2.4 per cent; Paper and Publishing, 1.4 per cent; Water Transport, 5.4 per cent; slow down in growth
He added that the output in the sectors contracted because of the prevailing economic and investment climate conditions. Road transport sector recorded the biggest contraction of 55 per cent in the second quarter. Other sectors that contracted include Coal Mining which contracted by 15.7 per cent; Motor vehicle Assembly, 3.9 per cent; Music and Motion Pictures, 2 per cent.
These are sectors that contracted in the first two quarters of 2023. They are the sectors that have been stumbling because of macroeconomic , structural or policy issues. Oil refining contracted by 35.6 per cent; Livestock, 2.3 per cent; Crude Petroleum and Gas, 13.4 per cent; Textile, 4.4 per cent. Growth in these sectors continued to be subdued by heightened inflationary pressures, exchange rate volatility, spiking energy cost, insecurity and the political economy of the oil and gas sector.
Dr. Muda concluded that the Nigerian economy is still going through corrective reforms to remove some fundamental distortions and restore the economy back to the path of recovery and growth.
“But implementing the reforms is an arduous task. The trade offs are profound and the social impact has been devastating. Given the inevitability of the reforms, the implementation calls for a delicate balancing act and strategic sequencing to ensure an inclusive economic transition.
“Dealing with the issues of insecurity, spending priorities, corruption, productivity and competitiveness, regulatory environment and macroeconomic stability are paramount to rebuilding the momentum of economic growth and development.”
