Dear Subscriber,

Nigeria’s real GDP expanded by 3.46% in Q4 2023, a slight improvement from the previous quarter. The underlying trend of this positive result raises more concerns than comfort to policymakers. This is because the annual growth rate declined by 0.36% to 2.74% from 3.1% in 2022. This was underpinned by economic headwinds that adversely affected business activities. The oil sector which is the main source of revenue grew by 12.11% in Q4 2023, after a negative trend for eight consecutive quarters. The output growth in the oil sector did not translate to revenue growth. The non-oil sector expanded by 3.07%, driven mainly by financial services, telecommunications, and manufacturing. The Services sector was the major driver of this growth, expanding by 3.98%, while agriculture and industry also showed positive results.

Of the 46 activities monitored by NBS, 9 (19.56%) expanded while others either slowed or contracted. This reflects the ongoing challenges including inflation, FX market disequilibrium, and insecurity. Notably, sectors that expanded are mainly job inelastic. In other words, economic growth might not be inclusive and may fail to lead to a reduction in unemployment rates.

Although the economy expanded by 3.46% in Q4’24, annualized at 2,74% from 3.1% in 2022 showing a 0.36% decline. Underperforming its expectations due to pressing concerns about exchange rate misalignment, and persistent inflationary pressure. The growth outlook for the next quarter is likely to be tepid if these concerns linger.

In the attached bulletin, the FDC Think-Tank analyzes the GDP numbers for Q4 and its implications.

Do enjoy your read…