Dear Subscriber,

The National Bureau of Statistics (NBS) released Nigeria’s Q3 GDP growth figures on November 25, showing an increase from 2.54% to 3.46% year-on-year, surpassing expectations. The year-on-year GDP growth was mainly supported by the services sector (especially insurance and financial services), which contributed more than half of the output. Of the 46 business activities monitored by the NBS, 15 expanded, while 21 slowed, and 10 others contracted. In other words, 32.6% of business activities in Nigeria were positive in direction. However, much of the growth came from labor-inelastic sectors, making it non-inclusive. Despite reduced consumer spending and increased borrowing costs, the economy remains resilient to spiraling inflation (33.88%) and cumulative interest rate hikes of 8.75%. However, overall financial conditions remain relatively loose.

Policy changes without institutional reform could be counterproductive 

Although the growth trend is positive, the macroeconomic environment remains strained with the increasing price of PMS and a weak naira in the forex market. The average Purchasing Managers’ Index (PMI) declined to 49.97, reflecting a contraction in economic activity. Policy changes in the last 12 months have faced significant headwinds. This is mainly because the institutions meant to deliver value to the people remain weak and ineffective.

Cautious optimism surrounds stronger Q4 growth, with the Economic Intelligence Unit raising its 2024 real GDP growth estimate from 3% to 3.2%. The policy environment is expected to become clearer, particularly in exchange rate and inflation management, though the benefits of market reforms may not materialize until Q2 2025.

In the link below, the FDC Think Tank analyses the GDP numbers for Q3’24 and its implications.

Enjoy your read!