The NBS released the Q3 GDP report yesterday, 7 days ahead of the scheduled date (November 24). In line with expectations, the economy sustained its positive growth even though it declined to 4.03% from 5.01%. This brings the average annual growth rate to 3.18% in 2021, which exceeds the IMF (2.6%) and World Bank (2.4%) forecasts.
The growth momentum was largely supported by a sustained recovery in the non-oil sectors primarily, transport (33.31%), financial institutions (25.50%), telecoms (10.87%) and construction (4.10%). The two sectors that are pivotal to the economy – petroleum, which contracted sharply and agric, which remains a laggard, are a cause for concern to policy makers. The petroleum sector is a major source of foreign exchange earnings and balance of trade, while the agric sector is the highest contributor to GDP (29.94%) and the largest employer of labour (54.7%).
Nigeria needs consistent reforms to achieve sustainable growth
Potential GDP growth (8.9%) is 5.72% higher than the real GDP growth (3.18%). This is partly because of heightened insecurity and currency pressures. The IMF, in its article IV review maintains that consistent reforms in exchange rate and fiscal consolidation are crucial for investment and sustainable growth. The ‘big-push theory’, propounded by Paul Rosenstein-Rodan, emphasized the need for massive capital infusion in developing economies, if they are to achieve sustained and inclusive growth. The theory argues that inadequate doses of investment will have a minimal impact.
MPC likely to maintain status quo as inflation moderates and GDP remains positive
The MPC meeting will hold next week (Nov 22/23). The positive growth (4.03%) and moderating inflation (15.99%) may persuade the committee to maintain status quo in its policy stance.
In the download, the FDC Think-Tank analyzes the GDP numbers for Q3 and its implications.
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