NBS Releases a More Plausible Set of GDP Growth Figures

A more plausible set of Gross Domestic Product (GDP) growth figures has been released following the April rebasing of GDP.  The new data show growth rates down significantly on what had been released previously – which is not a surprise, with growth in Nigeria trending around five percent, rather than the seven percent that had previously been assumed. 
Razia Khan, managing director, Head, Africa Macro Global Research, Standard Chartered Bank said the 2012 GDP was revised down to 4.21 percent from an estimated 6.5 percent previously. The data confirms that first quarter 2012 exhibited particularly weak levels of activity. This reflects the slowdown that we observed in the immediate aftermath of the attempt to remove fuel subsidies in full, when activity was disrupted by protests initially, a worsening security situation, and the slow passage of Nigeria’s budget for that year.
Even though the quarterly breakdown still suggests an acceleration of GDP over the course of 2013  (from 4.45 percent in the first quarter 2013 to 6.77 percent by the fourth quarter 2013), the average growth rate for 2013 is revised down to 5.5 percent from c. 7.3 percent with the initial, rebased estimates.
The immediate market impact of this data release is expected to be minimal.  In the past, Nigerian GDP data was more guesswork than anything robust.  The availability of better, more granular data now, showing quarterly performance in each individual subsector, will more than offset any disappointment over ‘weaker’ growth rates.
Crop production appears to have peaked earlier (in 2011/12) – we think this is more likely a result of the low base following recovery from the floods in Nigeria, then a comment on the impact of agri – sector reforms which are seen more clearly in the high frequency food inflation data.
The deterioration in the oil sector has worsened recently – in line with what we already observe from output levels.
Manufacturing has exhibited exceptional strength, with an average growth rate of 17.69 percent between 2010 and 2013. This was largely driven by a recent surge in oil refining (albeit off a very low base) and a sizeable pickup in cement manufacturing.  Growth  in the chemical & pharmaceutical products subsector has remained robust. 
Construction growth remained strong through 2010- 2013 (and was especially strong around the last elections in 2010/2011).  In contrast, the new data suggests that  growth in the trade sector has been more subdued.
In comparison to the pre-rebased GDP data, growth in the ICT sector appears to have been much lower than the previous estimates of c. 33 percent annually.  This may be because we are now working with more accurate data and the base is less skewed by a severe undermeasurement of the size of the sector.  Interestingly growth in publishing appears to have trended down, while growth in the’ motion pictures, sound recording and music production sub-sector’  appears to have exhibited the very opposite trend , rising much more strongly in 2012/13.  At first sight, this appears somewhat counterintuitive – as the expectation might be that both sectors might see similar influences. 
Financial sector growth has been volatile – contracting in the immediate aftermath of Nigeria’s banking crisis, then posting more of a recovery, but growing on average by only 0.9 percent between 2010 and 2013 – which comes as something of a surprise.  This is atypical, and does not match the kind of relationship one would normally expect to see between growth in the financial sector and overall GDP.  While Nigeria-specific issues are likely to have been a key influence, one would hope to see a normalisation of the relationship between financial sector growth and GDP growth over time.

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