According to the data released by NBS, Nigeria GDP exhibited a resilient momentum in Q3 2023, with a year-on-year growth of 2.54% in real terms. This expansion surpasses the figures recorded in Q3 2022 – 2.25%, and Q2 2023 – 2.51%. Notably, the oil sector evinced improvement in its year-on-year output, contrasting with the subdued year-on-year output growth observed in key segments within the non-oil sector.

The year-on-year growth in the oil sector improved to -0.85%, signifying a progression from the -22.67% recorded in Q3 2022, and the -13.43% reported in Q2 2023. In the broader economic landscape, the Oil sector contributed 5.48% to the overall GDP in Q3 2023, marking a positive upturn from its Q2 2023 contribution of 5.34%, but a decline from the 5.66% recorded in Q3 2022.

In Q3 2023, the non-oil sector demonstrated a modest year-on-year growth of 2.75%, marking a decline of 152 basis points compared to Q3 2022, and 84 basis points compared to Q2 2023. In terms of its contribution to the overall GDP, the non-oil sector accounted for 94.52%, showing a slight increase from 94.34% contribution in Q3 2022, but a decrease from 94.66% in Q2 2023.

 Outlook

We acknowledge the recent uptrend in daily oil production, and we remain optimistic about the sustained effectiveness of the security measures instituted to combat oil theft and pipeline vandalism – a menace that has not only impeded oil production but has also contributed to the disruption hindering the growth of the sector.

Contrastingly, our outlook for the non-oil sector, a pivotal GDP contributor, remains circumspect, as underlying challenges that echoed the contraction witnessed in Q3 2023 persist. We anticipate the contraction of household purchasing power to persist further due to the sustained ascent of inflationary pressures. This is expected to have adverse effect on the output growth across non-oil sector.

In manufacturing subsector, we see sustained feebleness in growth, given the cost increases in inputs and operational cost resulting from foreign exchange and fuel subsidy reforms. Also, the prevailing high interest rate environment poses an ongoing threat, with no foreseeable decline before H1 2024; at best, the current rate will persist, posing a persistent challenge for the sector.

With expectation of sustained increase in oil production, although at a slower pace, we revised our FY 2023 GDP growth forecast to 2.72% (previous: 2.70%) .

Please follow the link “Q3 2023 GDP Report – Critical Reform Slows Non-Oil GDP Growth” to view the whole report.