…Performance Driven By Services Sector
…Oil Sector Contributed 5.7% To Total Real GDP
…Agriculture Grew By 1.41%
Nigeria’s Gross Domestic Product (GDP) grew by 3.19 per cent (year-on-year) in real terms in the second quarter of 2024, the National Bureau of Statistics has said.
The bureau said that the growth rate is higher than the 2.51 per cent recorded in the second quarter of 2023 and higher than the first quarter of 2024 growth of 2.98 per cent.
The performance of the GDP in the second quarter of 2024 was driven mainly by the Services sector, which recorded a growth of 3.79 per cent and contributed 58.76 per cent to the aggregate GDP.
The agriculture sector grew by 1.41 per cent, from the growth of 1.50 per cent recorded in the second quarter of 2023. The industry sector’s growth was 3.53 per cent, an improvement from -1.94 per cent recorded in the second quarter of 2023.
In terms of share of the GDP, the industry and services sectors contributed more to the aggregate GDP in the second quarter of 2024 compared to the corresponding quarter of 2023.
In the quarter under review, aggregate GDP at basic price stood at N60.93tn in nominal terms. This performance is higher when compared to the second quarter of 2023 which recorded aggregate GDP of N52.1tn, indicating a year-on-year nominal growth of 16.94 per cent.
In terms of oil output, the NBS report stated that the nation in the second quarter of 2024 recorded an average daily oil production of 1.41 million barrels per day (mbpd), higher than the daily average production of 1.22 mbpd recorded in the same quarter of 2023 by 0.19 mbpd and lower than the first quarter of 2024 production volume of 1.57 mbpd by 0.16mbpd.
The report added, “The real growth of the oil sector was 10.15 per cent (year-on-year) in Q2 2024, indicating an increase of 23.58 per cent points relative to the rate recorded in the corresponding quarter of 2023 (-13.43 per cent).
“Growth increased by 4.45 per cent points when compared to Q1 2024 which was 5.70 per cent. On a quarter-on-quarter basis, the oil sector recorded a growth rate of -10.51 per cent in Q2 2024.
“The Oil sector contributed 5.70 per cent to the total real GDP in Q2 2024, up from the figure recorded in the corresponding period of 2023 and down from the preceding quarter, where it contributed 5.34 per cent and 6.38 per cent respectively.”
The report noted further that the non-oil sector grew by 2.80 per cent in real terms during the reference quarter, adding that this rate was lower by 0.78 percentage points compared to the rate recorded in the same quarter of 2023 which was 3.58 per cent.
“This sector was driven in the second quarter of 2024 mainly by financial and insurance; Information and Communication; agriculture; trade; and manufacturing, accounting for positive GDP growth.
“In real terms, the non-oil sector contributed 94.30 per cent to the nation’s GDP in the second quarter of 2024, lower than the share recorded in the second quarter of 2023 which was 94.66 per cent and higher than the first quarter of 2024 recorded as 93.62 per cent.”
Reacting to the GDP growth rate, some financial experts said the figure is a positive sign for economic recovery.
The experts speaking to NewsNGR exclusively expressed hope that this positive trend would continue in the coming quarters, ultimately leading to more diversified and sustainable economic growth for Nigeria.
The Group Managing Director of Crane Securities Limited, Mr. Mike Eze, has commented on Nigeria’s recent economic performance, describing the country’s Gross Domestic Product (GDP) growth of 3.19 per cent year-on-year in real terms for the second quarter of 2024 as both expected and a welcome development.
In an exclusive interview with NewsNGR Mr. Eze emphasized Nigeria’s position as the strongest economy in Africa, attributing the GDP growth to a range of ongoing financial strategies aimed at restructuring the nation’s economic system.
“Nigeria remains the leading economy on the continent, and there are significant financial engineering efforts underway to revamp and strengthen our economic framework,” Eze stated.
However, he noted that the government is currently grappling with several economic challenges, including the devaluation of the naira, a persistent foreign exchange crisis, the removal of fuel subsidies, and increases in electricity tariffs.
These issues have had a substantial impact on both the economy and the populace, creating a complex economic landscape.
Discussing the relationship between economic policy and GDP growth, Eze explained that, in times of inflation and economic downturn, it is common for experts to advise governments to borrow funds.
“The process of borrowing and subsequent spending can stimulate economic activity, which often leads to an increase in GDP,” he noted.
“This growth is primarily a result of increased government expenditure and investment.”
Eze further elaborated that the recent GDP growth reflects the immediate effects of such borrowing and spending, suggesting that these measures have begun to positively influence the economy.
“The rise in GDP by 3.19 per cent indicates that the economy is responding to these fiscal policies, and we can anticipate further growth in the coming quarters,” he said.
Despite the challenges, Eze remains optimistic about Nigeria’s economic prospects, forecasting continued growth as the country navigates its current economic restructuring efforts.
The former President of the Chartered Institute of Stockbrokers (CIS) and Managing Director of Arthur Steven Asset Management Limited Mr. Olatunde Amolegbe also speaking to NewsNGR described Nigeria’s recent GDP growth as a “pleasant surprise.”
However, he expressed concerns over the fact that this growth was primarily driven by increases in oil production, which he views as providing limited long-term relief.
“While the GDP growth is certainly a positive development, I would have preferred to see a more significant contribution from the non-oil sectors,” Amolegbe stated.
Amolegbe emphasized that complementary growth in sectors such as manufacturing, transport, agriculture, and services would have provided a more robust and sustainable boost to the GDP.
“Unfortunately, these sectors are currently facing headwinds due to elevated interest rates and rising inflation, which are creating a drag on their performance,” he explained.
Despite these concerns, Amolegbe acknowledged the importance of the recent growth, describing it as a “welcome baby step” towards economic recovery.
He expressed hope that this positive trend would continue in the coming quarters, ultimately leading to more diversified and sustainable economic growth for Nigeria.
Also speaking, Nigeria’s first Professor of Capital Market, Uche Uwaleke noted that the aggressive hike in monetary policy rate in February and March 2024 by the CBN took a toll on output in Q2 2024.
According to Uwaleke, this may explain the decline recorded in major contributors to GDP such as Manufacturing, Trade, ICT and Real Estate.
He said, “The impact of high cost of petroleum products manifested in the huge decline in Transport GDP from 3.33 per cent to -13.53 per cent
“Just like in Q1 2024, when growth was driven by the oil sector, growth in Q2 2024 was also driven by the oil sector at 10.15 per cent.
“Oil sector growth was aided largely by the increase in crude oil price during the quarter as average crude oil production fell (from 1.57mbpd in previous quarter to 1.41mbpd)
“Manufacturing and agriculture sectors appeared hugely impacted by economic headwinds during the quarter. Growth rates were a mere 1.28 per cent and 1.41 per cent respectively.
“The agric sector (comprising 4 activities although dominated by crop production) improved in Q2 2024 to 1.41 per cent from 0.18 per cent in previous quarter.
“The financial sector grew by 28.79 per cent, a clear demonstration that it is detached from the productive sectors of the economy.
“In my view, this identified growth pattern, weighted in favour of the services sector, is not healthy for a developing economy such as ours. Little wonder, economic growth does not appear inclusive reflecting in rising unemployment and poverty levels.
“It is time we reset this faulty economic structure, leveraging technology, in favour of the productive sectors: Industry and Agriculture.”