The Nigerian economy grew by 3.11% in Q1 this year. The first quarter is typically a slow season for growth because it coincides with the end of the harvest and the commencement of the planting season. The peculiarity of 2022, is that it is the first year of what can be described as a post covid economy. In Q1’ 21, the economy was still limping from covid restrictions and aftermath of the end-SARS protests. Therefore, when compared with the corresponding period of the prior year, the numbers look impressive but one can attribute the growth cosmetics to base year effects.
However, after discounting for the 2021 economic anemia, certain trends are noteworthy from the numbers. These include the fact that, 25 sectors expanded, 11 slowed and 10 contracted. The intriguing thing is that the expanding sectors are job elastic. The economic shock that followed Russia’s invasion of Ukraine and high rate of insecurity took a toll on some sectors. Road transport contracted by -24.63%, down from a positive growth rate of 30.39% in Q4 2021 while air transport slowed to 50.68%, which could be attributable to the surge in aviation fuel price.
The oil sector continued to pose a significant drawback on economic growth as it contracted by -26.04% due to increased rate of oil theft and pipeline vandalism. Nigeria has been unable to meet its OPEC production quota.
With the CBN hiking the policy rate by 150 basis points to 13%p.a in an effort to tame inflation (16.82%), investors are likely to become more optimistic about future growth in a tamed inflation era. The FDC Economic Think Tank explored these possibilities and several other policy issues in this edition of GDP Bulletin.
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