Q4 2022 GDP Report – Resilient Economic Performance as Full-Year GDP Grows by 3.10%

Economic Growth Weakens as Oil Production Woes Persist

The Nigerian economy grew by 3.52% year-on-year in Q4 2022 – a result that came in as a positive surprise. We had estimated a 2.79% year-on-year growth. The overperformance was majorly due to lower-than-estimated decline in the oil sector. The Oil sector declined by 13.38% year-on-year in Q4 2022, compared to declines of 22.67% year-on-year in Q3 2022, 11.77% year-on-year in Q2 2022, and 26.04% year-on-year in Q1 2022. We note that efforts in clamping down persistent oil theft intensified during the period and in our view, that helped to manage the extent of decline in oil production. The average daily oil production stood at 1.34mn barrels per day in Q4 2022, up 12% quarter-on-quarter from 1.20mn barrels per day in Q3 2022. However, on a year-on-year basis, oil production declined by 11%.

The Non-Oil sector maintained its relatively solid growth trajectory with a 4.44% year-on-year growth in Q4 2022 – slightly higher than the 4.27% year-on-year growth in Q3 2022. In Q2 2022 and Q1 2022, the Non-Oil sector grew by 4.77% and 6.08% year-on-year, respectively. The Services sector remained the growth driver with solid performances from the Information and Communications sector and the Finance & Insurance sector. The Trade sector also recorded a solid growth to drive the entire the Services sector. Meanwhile, the Agricultural sector maintained its resilience in Q4 2022.

Another positive surprise was the rebound of the Manufacturing sector in Q4 2022, which grew by 2.83% year-on-year, having declined by 1.91% in Q3 2022. We believed that persistent FX illiquidity and global supply chain disruptions were expected to weigh negatively on the production capacity of manufacturing firms. Hence, we expected to see a decline in Q4 2022. Notably, the Food, Beverage & Tobacco manufacturing subsector grew by 4.94% in Q4 2022 (Q3 2022: -4.05%) while the cement manufacturing subsector grew by 3.89% in Q4 2022 (Q3 2022: 4.14%).

Full Year Economic Performance Sparks Hope

On a full-year basis, the economic output grew by 3.10% year-on-year (our forecast: 2.90%), slightly lower than the 3.40% growth recorded in FY 2021. The growth breakdown revealed that while the Non-Oil sector growth improved to 4.84% in FY 2022 (FY 2021: 4.44%), the Oil sector performance worsened to -19.22% (FY 2021: -8.30%). As mentioned above, heightened spate of oil theft was the reason for the decline in oil output during the year. The economic performance in 2022 represented the second-best year since the inception of the current administration 2015. Also, we note that economic output surpassed population growth for the second time in the past eight years. The key economic drivers were the Information and Communications sector (+9.76%), Agricultural sector (+1.88%), Trade sector (+5.13%), Finance & Insurance sector (+16.36%), and Manufacturing sector (+2.45%).


We welcome the recent positive trend of the Nigerian economic performance. We expect the trend of steady growth to sustain in the near term. Our GDP forecast for FY 2023 is 2.85%. However, we believe that underlying bottlenecks inhibiting growth are present including foreign exchange illiquidity and rising inflationary pressure. On foreign exchange illiquidity, the production capacity of companies could be under pressure if the required raw materials are not easily accessible. While we note that some corporates have deployed alternate approaches to sourcing FX, we still expect to see significant constraints. Inflationary pressures are expected to negatively impact the aggregate demand in the economy, as consumers purchasing power erodes. The recent Naira redesign bottlenecks, if persistent, could also dampen the level of economic activities.

On the other hand, we expect to see a rather ineffective implementation of fiscal policy in 2023 due to electioneering activities. The change of government and settling down of a new government may extend to at least Q3 2023. Thus, we believe that implementation of key policies might not get the required full attention. On a positive note, however, we expect oil production to improve moderately to 1.40mn – 1.50mn barrels per day – although still below historical levels and OPEC quota.

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