The oil sector in Nigeria recorded a real growth rate of 5.06% (year-on-year) in Q1 2020 indicating an increase of 6.51% points relative to the rate recorded in the corresponding quarter of 2019. This pushes the country’s Gross Domestic Product, GDP up by 1.87 percent {year on year} the National Bureau of Statistics has disclosed.
This was contained in the ‘Nigeria’s Gross Domestic Product’ report for the first quarter of 2020 published on Monday.
“Quarter-on-quarter, the oil sector recorded a growth rate of 11.30% in Q1 2020. However, when compared to Q4 2019 which recorded a growth rate of 6.36%, oil sector growth decreased by –1.30% points.
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The contribution of the Oil sector to aggregate GDP stood at 9.50% in Q1 2020, up from the figure recorded in the corresponding period of 2019 (9.22%) and the preceding quarter (7.32%), as the share of the non-oil economy declined.
Recall that during the first quarter of 2020, average daily oil production of 2.07 million barrels per day (mbpd) was recorded. The production level was higher than the 1.99mbpd recorded in the same quarter of 2019.
Meanwhile, the non-oil sector grew by 1.55% in real terms during the reference quarter, but slower by –0.93% points year on year.
The report showed that the non-oil sector was driven mainly by
“Information and Communication (Telecommunications), Financial and Insurance (Financial Institutions), Agriculture (Crop Production), Mining and Quarrying (Crude Petroleum & Natural Gas), and Construction”.
Overall, Nigeria’s Gross Domestic Product (GDP) grew by 1.87%(year-on-year) in real terms, representing a drop of 0.23% points compared to Q1 2019 and 0.68% points decline compared to Q4 2019
The statistical agency said in the quarter under review, aggregate GDP stood at N35, 647,406.08 million in nominal terms.
“This performance was higher when compared to the first quarter of 2019 which recorded N31, 824,349.67 million, with a nominal growth rate of 12.01% year on year.
Relative to the first quarter of 2019, the nominal growth rate was higher by 0.11% points but lower than the preceding quarter by –0.32% points.”
Nigeria’s service sector showed strong resilience in the period under review as it contributed 54.39% to the aggregate GDP, up from 53.64% recorded in Q4 2019. Also, the industrial sector recorded a marginal increase in its contribution to GDP at 23.65%, up from 22.25% in Q4 2019. Meanwhile, the contribution from the agriculture sector contracted to 21.96% from 25.16% in the previous quarter. A contraction in the agricultural sector may be largely traceable to the planting season.
The slow growth momentum had been sustained through the subsequent quarters until the latest contraction which is attributable to the disruption caused by the Covid-19 pandemic and oil price.
It is important to note that while the Nigerian economy contracted slightly in Q1, growth in Q2 is expected to dip largely in Q2 due to lockdown across major economies of the world which disrupted both supply and demand chain.
The Oil sector, Travel, and Tourism, Hospitality and Manufacturing are among sectors expected to contract largely in subsequent through 2020
Recall that the International Monetary Fund, IMF has predicted that the Nigerian economy is expected to contract by -3.4% in the year, as Covid-19 pandemic and oil price shock exacerbate the vulnerability of Nigeria fiscal and monetary landscape.
