Manufacturing sector struggles as its GDP contribution shrinks by 20.95% in six months
Nigeria’s manufac turing sector’s contribution to the Gross Domestic Product (GDP) has witnessed a significant contraction over the past two quarters, reflecting a decline of 20.95 percent from the end of 2023 to the second quarter of 2024.
According to the National Bureau of Statistics (NBS) reports, the sector’s contribution to GDP fell from 16.04 percent in Q4 2023 to 12.68 percent in Q2 2024, highlighting the sector’s increasing struggles amid the country’s economic challenges.
This progressive decline over the first half of 2024 underscores the sector’s vulnerabilities, particularly in the face of ongoing economic and infrastructural challenges.
The Q4 2023 report indicated a manufacturing sector contributing 16.04 percent to the GDP, showcasing the sector’s substantial role in Nigeria’s economy.
However, this contribution sharply declined in Q1 2024 to 14.79 percent, marking the beginning of a downward trend that has culminated in a further drop to 12.68 percent by Q2 2024.
The manufacturing sector’s nominal GDP growth in the second quarter of 2024 was recorded at 1.91 percent year-on-year. This represents a significant decline of 27.99 percent-points compared to the 29.90 percent growth recorded in the corresponding period of 2023.
Moreover, it marks a 6.30 percent-point decrease from the 8.21 percent growth registered in the first quarter of 2024. On a quarter-on-quarter basis, the sector experienced a contraction of 11.25 percent during Q2 2024.
The nominal GDP growth rate is crucial as it represents the monetary value of all goods and services produced by the manufacturing sector without adjusting for inflation.
The sluggish growth in nominal terms indicates that the sector is struggling to expand its output, and this stagnation could have far-reaching implications for employment, investment, and overall economic stability in Nigeria.
The manufacturing sector’s contribution to nominal GDP in Q2 2024 was 12.68 percent, down from 14.55 percent in Q2 2023 and lower than the 14.79 percent recorded in Q1 2024.
When examining the real GDP growth and the sector’s contribution to overall GDP, the manufacturing sector’s performance presents a concerning picture.
Real GDP growth in the manufacturing sector, which adjusts for inflation, provides a clearer view of the sector’s actual production levels and economic value.
The real GDP growth in the manufacturing sector also reflects the sector’s ongoing struggles. In Q1 2024, real GDP growth for the manufacturing sector was 1.49% year-on-year, a slight improvement over the previous quarter, with a contribution to overall GDP of 9.98 percent.
However, by Q2 2024, real GDP growth had further declined to 1.28 percent, which is lower than both the growth recorded in Q2 2023 and the preceding quarter.
The quarter-on-quarter growth rate in Q2 2024 stood at -15.16 percent, a significant drop from the 1.74 percent quarter-on-quarter growth observed in Q1 2024.
The sector’s real contribution to GDP in Q2 2024 was 8.46 percent, down from 8.62 percent in Q2 2023 and also lower than the 9.98 percent contribution recorded in Q1 2024.
