The National Bureau of Statistics (NBS) has announced how growth in agriculture and telecommunications offset a sharp drop in oil production to push Nigeria’s Gross Domestic Product (GDP) to 0.11per cent in the fourth quarter (Q4) of 2020.
The modest growth of 0.11per cent in the quarter compares with a contraction of -3.62per cent the previous quarter and 2.55per cent in the year-earlier period.
The NBS says the non-oil economy expanded by 1.7per cent from a year earlier, the strongest rate in four quarters, with agriculture growing 3.4per cent and telecommunications increasing 17.6per cent.
The growth in real terms in Q4 2020 was slower than the 2.26 per cent recorded in the corresponding quarter of 2019 but better than the 2.51per cent negative growth rate recorded in the preceding quarter.
According to NBS, growth in the sector was largely driven by Information and Communication (Telecommunications & Broadcasting).
Other drivers were Agriculture (Crop Production), Real Estate, Manufacturing (Food, Beverage & Tobacco), Mining and Quarrying (Quarrying and other Minerals), and Construction.
In real terms, the Non-Oil sector contributed 94.13per cent to the nation’s GDP in the fourth quarter of 2020, higher than the share recorded in the fourth quarter of 2019 (92.68 per cent) and the third quarter of 2020 (91.27 per cent).
The agricultural sector, in the fourth quarter of 2020, grew by 3.42per cent (year-on-year) in real terms, an increase by 1.11per cent points from the corresponding period of 2019, and an increase of 2.03per cent points from the preceding quarter which recorded a growth rate of 1.39 per cent.
The sector also contributed 26.95 per cent to the overall GDP in real terms in Q4 2020, higher than the contribution in Q4 2019 but lower than Q3 2020 which stood at 26.09 per cent and 30.77per cent respectively.
Information and communication recorded a growth rate of 14.95 per cent in real terms, an increase of 6.45 per cent points over the corresponding period of 2019.
The sector contributed 15.06 per cent to aggregate real GDP in Q4 2020, higher than the same quarter of the previous year in which it represented 13.12 per cent and higher than the preceding quarter, in which it represented 13.47 per cent.
According to experts, the surprise rebound means Nigeria may recover faster than expected as the oil price and output increase this year. It could also point to the growing importance of the non-crude sector.
Oil production fell to 1.56 million barrels a day in the fourth quarter from 1.67 million barrels in the previous three months.
While crude contributes less than 10per cent to the country’s GDP, it accounts for nearly all foreign-exchange earnings and half of government revenue in the continent’s biggest producer of the commodity.
Economists say a stronger recovery could ease pressure on the central bank to stoke activity, paving the way for a renewed focus on its price stability mandate. That means the monetary policy committee of the CBN could start raising interest rates again to fight inflation that’s been above the target band of 6 per cent to 9 per cent for more than five years. The panel eased by 200 basis points in 2020.
However, analysts at FBNQuest Capital Research are of the view that since the national accounts are not seasonally adjusted and since the fourth quarter tends to be the strongest of the year due to the demand boost in the holiday season, “we should not assume automatically that Nigeria has exited its latest recession.”