|Gross Domestic Product: Q4 2017
We apologise if you are yet to see the movie. We hate spoilers too but the recent trends in Nigeria’s economic growth remind us of Black Panther. Keep reading and you’ll get the link.
The pace of economic growth picked up with data from the National Bureau of Statistics (NBS) reporting Nigeria’s GDP for Q4 2017 at 1.9% YoY, 80bps above our expectation of 1.1%. For us, while a growth in the quarter was widely expected, the drivers of growth – which varied from consensus expectation of an oil-led growth – points to some positive on economic diversification and improvement in the productive sectors.
For context – in contrast to prior quarters wherein the oil sector led growth (a case of oil production recovery) – accelerated growth in Agriculture (4.2% YoY, Q3 17: 3.1%), recovery in Trade (2.1% YoY, Q3 17: -1.7%) and slower contraction in Services (-0.8% YoY, Q3 17: -3.1%) largely drove the overall economic growth in Q4 17. Accordingly, the non-oil sector (93% of GDP) returned to growth (+1.5% YoY) in the quarter from a contraction of -0.8% YoY in the third quarter. The foregoing, combined with oil sector growth of 8.4% YoY (Q3 17: 25.9% YoY), drove the faster growth of 1.9% YoY in Q4.
Consequently, 2017 economic growth prints at 0.8% YoY (estimate: 0.6% YoY). Just like the film ‘Black Panther’ with near-record crowds descending on theatres across Nigeria, the growth picture in Q4 17 requires some cause to cheer, and also moderates the concern on fragility of economic recovery.
Elsewhere, the services sector also saw a slower contraction of -0.3% (Q3 17: -1.1%) during the review period which stemmed from the ICT sector (Q4 17: -1.5%; Q3 17: -4.5%). Though data from the Nigerian Communications Commission revealed a downturn in industry voice calls (-7% YoY to 142 million active subscribers), mild growth in data services (YoY: 3% to 95 million subscribers) was able to tame its effect on the industry’s total output. Although oil refining remained in negative territory, losing -46.2% YoY, faster growth in food, beverage and tobacco (YoY: Q4 17: +2.2%; Q3 17: 0.6%) and Textile, Apparel and Footwear (YoY: Q4 17: +1.6%; Q3 17: 0.2 %) served as pillars in pushing the manufacturing sector back to a positive growth of +0.1% (Q3 17: -2.9%).