Positive GDP may cause stronger economic growth – Analysts

Analysts have said that the 3.84 per cent growth in Nigeria’s Gross Domestic Product in the fourth quarter of 2024 has raised the prospects of even stronger growth in 2025.

This was stated following the release of the report by the National Bureau of Statistics on Tuesday, which put the 2024 annual GDP growth rate at 3.40 per cent, up from the 2.74 per cent reported in 2023.

According to NBS, Nigeria’s Gross Domestic Product grew by 3.84 per cent in real terms in the fourth quarter of 2024, reflecting an improvement from the 3.46 per cent recorded in the same period of 2023.

The NBS attributed the expansion to stronger performance in the services sector, which recorded a 5.37 per cent growth rate and accounted for 57.38 per cent of the country’s total GDP.

The Chief Executive Officer of Arthur Stevens Asset Management Limited, Tunde Amolegbe, noted that it was a positive growth for the economy.

He said, “This is a positive development, and it’s a sign that the economy is turning a corner from the pains of the reforms by the current administration. The main contributor to the increment was the service sector, as previously identified.

“Now that we are seeing stability in the FX market and there is a possibility of lower interest rates on the horizon, we could very well see stronger contributions to GDP growth by sectors such as the Industrials and Consumer Goods that have been lagging. My expectation is that all else being equal, the economy might put in a stronger performance than most analysts expect for 2025.”

Amolegbe projected that there may be a need for further upward review of economic projections.

The ex-Chief Economist at Zenith Bank, Marcel Okeke, also hailed it as a positive development, saying, “Thank God, it’s still a positive growth.”

In a press statement accompanying the GDP report, the Statistician-General of the Federation/Chief Executive Officer, National Bureau of Statistics, Adeyemi Adeniran, said that in terms of annual contributions to the economy, “Agriculture contributed 24.64 per cent in 2024, which is lower compared to its contributions in 2023, which stood at 25.18 per cent.”

Similarly, the industry sector’s annual contribution was 18.47 per cent which is also lower than the figure recorded for 2023 (18.65 per cent).  However, the services sector contributions for 2024 were 56.89 per cent which exceeded the 56.18 per cent recorded for 2023.”

Further analysis based on a categorisation of the economic activities into oil and non-oil sectors indicated that the annual oil GDP for 2024 grew by 5.54 per cent, which is 7.75 per cent higher than the annual GDP recorded for 2023 (-2.22 per cent).  On an annual basis, the non-oil grew by 3.27 per cent in 2024, which is higher than the rate recorded in 2023, which stood at 3.04 per cent, while in terms of aggregate contributions, the non-oil contributed 94.49 per cent in 2024, which is lower than the 94.60 per cent reported in 2023.

Meanwhile, the NBS has indicated that the new report was not calculated using the rebased methodology, as 2010 was still the base year in the documents released on Tuesday.

In January, the NBS had said that the new rebased Gross Domestic Product report would be launched once it completed the process.

It was also revealed that 2019 has been picked as the rebase year.

During a sensitisation workshop on GDP and CPI rebasing organised by the Nigerian Economic Summit Group and the NBS in Lagos, the technical assistant to the Statistician General, Moses Waniko, said, “Beyond that, there are other implications for the national economy, which we have tried to put in this slide. The first is that rebasing will provide or allow for an economic and development plan.

“The second is that the rebasing will really help to provide a good trajectory for the economy. So, beyond this, it’s important to also state that after the rebasing, there are certain things that we expect that might change, such as changes in the size of the structure of the economy.

“We expect that the size of the economy will be bigger. The tax-to-GDP ratio is something that people may want to see what the numbers would look like. The debt-to-GDP ratio of 18.5 per cent as of September 2019 could also reduce with the bigger size of the GDP, and then per capita income will increase after the rebasing.”

Multiple analysts agreed with the projection of a bigger economy on the back of the rebased GDP.

Nigeria’s first Professor of Capital Market, Prof. Uche Uwaleke, in his comments said, “A cursory glance shows that the economic activities expanded in 2024 more than in 2023, reflecting the gradual easing of the impact of the severe economic shocks occasioned by the twin reforms of fuel subsidy removal and exchange rates unification.

“While improvement in crude oil output in Q4 2024 compared to Q3 2024 is commendable, it is worrisome that the real sectors of the economy, notably agriculture and industry, continue to underperform. In view of their job-creating potentials, a raft of fiscal incentives is required at this time to boost the productive sectors of the economy.”