Dear Subscriber,

Nigeria’s real GDP growth rate declined sharply by 1.03% to 2.51% in Q2’23 from 3.54% in the corresponding period in 2022. GDP growth has been constrained by many factors, especially the debilitating and lingering effect of the naira redesign policy in Q1. The good news is that Nigeria’s actual GDP growth is much higher than the potential growth of -0.6%. This implies that the risk of the economy slipping into a recession is low.

The oil sector has been in recession for the past three years

A breakdown of the data showed that the oil sector, which is a major source of revenue (> 50%) and foreign exchange earnings (> 80%), shrank by 13.43%. This sector has been in recession for the past three years, negatively impacting dollar inflows and leading to naira weakness in the forex market. Also noteworthy is that most of the fast-growing sectors (metal ores, quarrying, rail transport) are not employment intensive, suggesting that unemployment could increase in the coming quarters, reversing the decline in Q1’23 (4.1%) from 5.3% in Q4’22.

MPC to maintain its hawkish monetary stance despite slow growth

The slow growth (2.51%) and spiraling inflation (24.08%) will be major considerations at the MPC meeting on September 25/26. We expect the committee to maintain its hawkish monetary policy stance despite the slow pace of economic growth.

In the link below, the FDC Think-Tank breaks down the GDP numbers for Q2’2023, analyzing its implications on your business, wallets, and the overall economy.

Enjoy your read…