Global Economic Outlook (G.E.O)
Nigeria’s GDP Grows by 3.54% but Oil Sector Contracts. Vol. 104. August 29, 2022.
Dear readers, welcome to another edition of the Global Economic Outlook (G.E.O) - our weekly newsletter providing insights on finance, investment and the economy. In today’s edition, we will be discussing Nigeria’s economic growth for the second quarter of 2022.
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Nigeria’s GDP Grows by 3.54% but Oil Sector Contracts
The National Bureau of Statistics (NBS) has released the report of Nigeria’s Gross Domestic Product (GDP) for the second quarter of 2022 and it shows an increase to 3.54% from 3.11% recorded in the first quarter of the year. GDP is the general measure of economic growth and it is used to determine the overall state of a country’s economy.
The marginal GDP growth in the second quarter of 2022 stops the slide in the economy which started in the third quarter of 2021, although the level of growth means that most people still cannot feel the impact. It also means that the economy still has a chance to outperform the yearly GDP growth rate for 2021 which was 3.40%.
The primary driver of the GDP growth in the second quarter was the non-oil sector which grew by 4.77% and contributed about 93.67% to the total GDP. The Oil Sector contributed only 6.33% to the GDP and contracted by 11.77% year on year. The contraction in the Oil Sector is actually better that what was recorded in the first quarter when it contracted by 26.04%.
It is sad that Nigeria is not able to take advantage of the rising prices in the global oil market. Oil production has continued to fall short of the quota assigned by the Organization of Petroleum Exporting Countries (OPEC) and declined to 1.43 million barrels per day (mbpd) in the second quarter. By comparison, oil production was 1.49mbpd in the first quarter and 1.61mbpd in the corresponding quarter for 2021.
Many of the Oil producing countries around the world are enjoying a windfall in income from the rising Oil prices but Nigeria’s case remains a concern. A combination of poor policies and Oil theft means that the country is not well off during a boom or crash. Saudi Aramco, which is Saudi Arabia’s state oil company is looking to invest as much as $7.5 billion in American blue-chip companies due to the massive resources available to them from the boom in the global oil market but Nigeria cannot boast of the same thing.
If Nigeria is to experience significant growth in the coming months, the contribution of the Non-Oil and Oil Sectors have to improve.
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The 8th Live Edition of the Global Economic Outlook (G.E.O) was held on Tuesday, 28th June 2022 with experts discussing the state of the Nigerian economy and how Small and Medium Scale Enterprises (SMEs) can navigate the difficult business environment. It is a must watch!
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