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Q4 GDP growth takes economy out of recession

Posted by on February 19th, 2021 at 2:02 am 👏 Drop Comment
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    By Collins Nweze, John Ofikhenua and Jide Orintunsin, Abuja

    • Expert: EndSARS impact exaggerated

    • APC excited

    Nigeria’s Gross Domestic Product (GDP) grew by 0.11 per cent (year-on-year) in real terms in the fourth quarter of 2020, pushing the economy out of recession, data from National Bureau of Statistics (NBS) released on Thursday showed.

    According to the report, growth in agriculture and telecommunications offset a sharp drop in oil production.

    This represents the first positive quarterly growth in the last three quarters.

    Though weak, the positive growth reflects the gradual return of economic activities, following the easing of restricted movements and limited local and international commercial activities in the preceding quarters

    The report added that as a result, while the fourth quarter 2020 growth rate was lower than growth rate recorded the previous year by –2.44 per cent points, it was higher by 3.74 per cent points compared to third quarter of 2020.

    On a quarter on quarter basis, real GDP growth was 9.68 per cent, indicating a second positive consecutive quarter on quarter real growth rate in 2020 after two negative quarters.

    According to the NBS,  overall, in 2020, the annual growth of real GDP was estimated at –1.92 per cent, a decline of –4.20 per cent points when compared to the 2.27 per cent recorded in 2019.

    Read Also: Recession: Nigerians must moderate foreign goods consumption to stabilize economy — Emefiele

    The report noted that in the quarter under review, aggregate GDP stood at N43,564,006.29 million in nominal terms. This performance, it said,  is higher when compared to the fourth quarter of 2019 which recorded a GDP aggregate of N39,577,340.04 million, representing a year on year nominal growth rate of 10.07 per cent.

    Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said contrary to market expectations, the economy recorded its first positive growth of 0.11 per cent (year-on-year) in the fourth quarter of 2020 after two consecutive quarters of negative growth.

    “Full year growth for 2020 is -1.92 per cent and implies that the recession is over. This came in against the trend and means that the EndSARS effect was exaggerated and had only a muted impact,” he said.

    According to Rewane, of the 46 activities, 29 expanded as against 21 in third quarter. He said this has positive implications for the policy trajectory in 2021, as we expect the policy thrust to become more focused on ensuring price and exchange rate stability.

    “Compared to 2016/17, this recession lasted only for six months. Also, the expanding sectors are job elastic and are likely to have a positive impact on the unemployment level in the economy”.

    The NBS indicated that this growth rate was lower relative to growth recorded in the fourth quarter of 2019 by –2.26 per cent points but higher than the preceding quarter by 6.68 per cent points with growth rates recorded at 12.34 per cent and 3.39 per cent respectively.

    In the oil sector, the fourth quarter of 2020, an average daily oil production of 1.56 million barrels per day (mbpd) was recorded.

    “This was lower than the daily average production of 2.00 mbpd recorded in the same quarter of 2019 by -044 mbpd and the third quarter of 2020 by–0.11 mbpd”.

    According to NBS, real growth of the oil sector was–19.76 per cent(year-on-year) in fourth quarter 2020 indicating a decrease by–26.12 per cent points relative to the rate recorded in the corresponding quarter of 2019.

    According to the report, growth decreased by –5.87 per cent points when compared to third quarter 2020. Quarter-on-quarter, the oil sector recorded a growth rate of –26.27 per cent in fourth quarter 2020.

    ”For 2020, the oil sector grew at–8.89 per cent compared to 4.59 per cent in 2019. The oil sector contributed 5.87 per cent total real GDP in fourth quarter 2020, down from the corresponding period of 2019 and the preceding quarter, where it contributed 7.32 per cent and 8.73 per cent respectively.

    “The non-oil sector grew by 1.69 per cent in real terms in fourth quarter of 2020, slower than the 2.26 per cent recorded in the corresponding quarter of 2019, but better than the–2.51 per cent growth rate recorded in the preceding quarter.  For the fully ear of 2020 however, the non-oil sector grew–1.25 per cent compared to 2.06 per cent in 2019”.

    Growth in the sector was 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, accounting  for positive GDP.

    In real terms, the Non-Oil sector contributed 94.13 per 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).

    “For 2020, the Non-Oil sector contributed 91.84 per cent to real GDP, higher than 91.22 per cent recorded in 2019”.

    The All Progressives Congress (APC) praised President Muhammadu Buhari for leading the country out of recession.

    In a statement by the Secretary, Caretaker/Extra-Ordinary Convention Planning Committee (CECPC), Senator John James Akpanudoedehe, the party said: “President Buhari promised Nigeria will exit economic recession within a short time. That promise has been kept.

    “Commendably, Nigeria’s exit from recession is the country’s first growth in three quarters amid the Coronavirus restrictions and consequent economic slowdown. “

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