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Services Sector up by 1.83 % in 2018 – NBS

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Inflation

The National Bureau of Statistics (NBS), said the services sector of the economy measured by the Gross Domestic Product (GDP) grew by 1.83 per cent in 2018.

The NBS disclosed this in its “GDP Report for the Fourth and Full Year 2018’’ posted on its website.

The bureau said the sector had recorded positive growth as the figures moved from -0.82 per cent in 2016 and -0.91 per cent in 2017 to 1.83 per cent in 2018.

The report showed that the sector had also recorded best performance in 11 quarters from 2016 to 2018.

Some of the services sectors are construction, transport and storage, Information and communication, Art, Entertainment and Recreation, and electricity supply.

They also include water supply, waste management, accommodation and food services, financial and insurance as well as health and social services.

For instance, the construction sector grew by 58.51 per cent in fourth quarter, 2018 in nominal terms.

These figures reflected an increase of 39.26 per cent points when compared to the growth rate of 19.25 per cent that was recorded in fourth quarter of 2017.

It also showed an increase of 5.84 per cent points when compared to its growth rate in the preceding quarter.

Quarter on quarter, nominal growth in this sector was 26.41 per cent, while for 2018, nominal growth rate was 40.85 per cent.

Furthermore, the sector contributed 5.03 per cent to nominal GDP in fourth quarter, 2018, which was higher than both the 3.58 per cent contribution 2017 and the 4.20 per cent contribution recorded in third quarter, 2018.

On an annual basis, nominal contribution to GDP in 2018 also improved (4.72 per cent), compared to 2017 (3.77 per cent).

Overall, the sector’s contribution to real GDP in fourth quarter, 2018 remained relatively unchanged (3.48 per cent) compared to 2017 (3.49 per cent), but higher than in the preceding quarter (3.01 per cent).

The sector’s contribution to total real GDP in 2018 also remained relatively stable at 3.73 per cent compared to 2017.

Meanwhile, the transport and storage sector’s contribution to real GDP in fourth quarter, 2018 was 1.46 per cent and 1.37 per cent for the whole of 2018, road transport being the dominant activity (85 per cent).

Six activities made up the Transportation and Storage sector: road, rail and pipelines, water air transport, transport services; and post and courier service.

In real terms, the Information and Communication sector recorded a growth rate of 13.20 per cent in fourth quarter, 2018, representing an increase of 14.65 per cent points when compared to fourth quarter, 2017.

Quarter on quarter, the sector exhibited a real GDP growth rate of 23.75 per cent. For 2018, real GDP growth rate stood at 9.65 per cent.

By contribution to the economy, the sector accounted for 12.40 per cent of total real GDP in fourth quarter, 2018 and 12.22 per cent of total real GDP in 2018.

Also, Arts, Entertainment and Recreation sector grew by 5.06 per cent in fourth quarter, 2018 in nominal terms.

This represented an increase of 1.51 per cent points relative to the preceding quarter and an increase of 0.89 per cent points relative to the preceding year.

Annual growth in nominal terms was 3.06 per cent in 2018, a decline from 9.07 per cent recorded in 2017.

By contribution, the activity accounted for 0.18 per cent of nominal GDP in fourth quarter, 2018 and 0.21 per cent of total annual nominal GDP in 2018.

In real terms, the activity grew by 4.18 per cent in fourth quarter, 2018 which was higher than the rate recorded in fourth quarter, 2017 and third quarter, 2016.

The rate recorded in fourth quarter 2017 was 0.64 per cent points higher and the rate recorded in third quarter, 2018 was 1.35 per cent points higher.

On an annual basis, real GDP growth rate was slower for the activity in 2018 at 2.53 per cent compared to 4.13 per cent recorded in 2017.

Arts, Entertainment and Recreation contributed 0.20 per cent to real GDP in fourth quarter, 2018 and 0.22 per cent for the whole of 2018, remaining relatively stable over the past year.

According to the NBS, the methodologies used in computing the GDP is in line with international standards outlined under the UN Statistics Division (UNSTATS)

Quarterly National Accounts (QNA) are an integrated system of macroeconomic accounts designed to describe the entire system of production in a nation on a quarterly basis.

They provide a picture of the current economic status of an economy on a more frequent basis than Annual National Accounts (ANA).

In providing a reasonable level of detailed information of the economy, QNA allows the government to regularly assess, analyse and monitor economic developments.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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African Economy Set for Steady Growth: 4% Projected for 2025

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Nigerian Breweries - Investors King

Experts are forecasting a robust growth trajectory of 4% for the continent in 2025.

This optimistic projection was highlighted during the ongoing Afreximbank annual meetings, incorporating the Africaribbean Trade and Investment Forum, held recently in Nassau, The Bahamas.

Yemi Kale, Group Chief Economist and Managing Director of Research and International Cooperation at Afreximbank, presented the 2024 African Trade Report and Economic Outlook, saying the African Continental Free Trade Area (AfCFTA) is significant in driving economic integration and growth.

The projected growth rate of 4% for 2025 reflects a steady recovery path for Africa, building on the expected 3.5% growth anticipated for 2024.

This positive outlook comes at a crucial time when African economies are navigating challenges posed by global economic dynamics, including inflationary pressures and supply chain disruptions.

Kale underscored the resilience of intra-African trade, which expanded by 3.2% in 2023 despite a 6.3% overall contraction in Africa’s trade volumes.

This resilience is a testament to the AfCFTA’s potential to bolster regional trade ties and reduce dependency on external markets.

The Afreximbank report also delved into macroeconomic environments, trade patterns, and sovereign debt sustainability dynamics, providing policymakers and business leaders with actionable insights to navigate complexities in global markets effectively.

Nomusa Dube-Ncube, Premier of Kwazulu-Natal, highlighted Africa’s modest share of global GDP and manufacturing output, emphasizing the untapped potential within intra-African trade.

She noted that while Africa currently accounts for only 3% of world trade, intra-regional trade is steadily increasing, indicating a growing economic ecosystem within the continent.

Pamela Coke-Hamilton, Executive Director of the International Trade Centre (ITC), echoed the sentiment, advocating for enhanced trade between Africa and the Caribbean.

The ITC projects trade in goods and services between these regions to reach $1 billion by 2028, underscoring the mutually beneficial opportunities for economic expansion.

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Economy

Nigeria Sees 95% Surge in Food Imports Despite Emergency on Food Production

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Zambian economy

Nigeria’s food import bill has surged to a five-year high in the first quarter of 2024, despite the federal government declaring a state of emergency on food production.

Data from the National Bureau of Statistics (NBS) reveals a 95.28 percent increase in food imports to N920.54 billion from January to March, compared to N471.39 billion in the same period last year.

This alarming rise comes amid soaring food inflation, which hit a record 40.5 percent in April, reflecting a 15.92 percent year-on-year increase.

The sharp inflation has left many Nigerians struggling to afford a balanced diet, exacerbating the food security crisis in Africa’s most populous nation.

In March, President Bola Ahmed Tinubu emphasized the government’s commitment to self-sufficiency in food production, stating that Nigeria would not rely on imports to stabilize prices.

“We will not allow the importation of food but rather turn the lack in the country into abundance,” Tinubu declared. However, the latest import figures suggest that this goal remains elusive.

The NBS Foreign Trade Statistics report highlights that the value of food imports via maritime, air, and land routes surged 29.4 percent from N711.4 billion in the fourth quarter of 2023.

Major agricultural goods imported included durum wheat from Canada and Lithuania, valued at N130.26 billion and N98.63 billion, respectively. Frozen blue whitings from the Netherlands accounted for N16.67 billion.

Wheat imports alone constituted N519.75 billion of the total food import bill. The average cost of wheat imports, a significant driver of the food import value, increased by 33 percent compared to the previous quarter’s value of N391.01 billion.

The rising importation of wheat reflects its popularity among Nigerian consumers amid skyrocketing prices of close substitutes like garri and rice.

Overall, Nigeria’s total imports for Q1 2024 amounted to N12.64 trillion, representing a 39.65 percent increase from N9.05 trillion in Q4 2023 and a 95.53 percent rise from N6.47 trillion in Q1 2023. Food imports accounted for 7.3 percent of total imports during the period under review.

The bulk of Nigeria’s imports came from Asia, China, Europe, America, and Africa. Mineral fuels topped the import category with N4.44 trillion, representing 35.09 percent of total imports.

Machinery and transport equipment followed with N3.17 trillion, contributing 25.08 percent, and chemicals and related products at N1.79 trillion, making up 14.13 percent of total imports.

Despite the federal government’s initiatives to boost local food production and reduce dependency on imports, the latest data underscores the persistent challenges facing Nigeria’s agricultural sector.

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Ethiopia Boosts Spending by 21%, Eyes IMF Program for Economic Relief

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Northern Ethiopia - Investors King

Ethiopia has announced a 21% increase in its 2025 budget, marking the first budget since defaulting on a Eurobond payment and committing to economic reform discussions with the International Monetary Fund (IMF).

The nation’s Finance Minister, Ahmed Shide, revealed the new budget details to lawmakers on Tuesday, outlining plans to spend 971.2 billion birr ($16.9 billion) in the fiscal year starting July 2024.

The increased budget reflects Ethiopia’s commitment to addressing its economic challenges head-on. Despite the heightened expenditure, the fiscal deficit is projected to remain stable at 2.1% of gross domestic product (GDP), unchanged from the current fiscal year.

Financing the Deficit

Minister Shide outlined a plan to cover the 358.5 billion-birr deficit through a combination of local and foreign borrowing.

The domestic borrowing component will be managed via government treasury bills and medium-term bonds. Shide emphasized that until substantial external donor support is secured, Ethiopia will continue to rely heavily on its domestic markets to finance budget deficits.

“While the government has secured some external financing from the World Bank and the European Union, negotiating an IMF program will be crucial to alleviate pressure on local banks and secure overall debt relief,” said Giulia Filocca, a senior analyst at Standard & Poor’s for sovereign and international public finance ratings.

IMF Program and Economic Reforms

An agreement with the IMF is seen as a pivotal step for Ethiopia. The nation failed to remit a $33 million coupon payment for its $1 billion bond in December 2023, leading to agreements with some creditors, including the Paris Club, to suspend debt repayments.

In exchange, Ethiopia is expected to reach a staff-level agreement with the IMF, which will likely include economic reforms such as devaluing the birr currency.

“Our expectation is that an IMF program will be signed this year, but the timeline remains unclear due to ongoing political developments and challenges over foreign-exchange reforms,” added Filocca.

Budget Highlights

The new budget includes 451.3 billion birr for recurrent spending, 283.2 billion birr for capital expenditure, and 236.7 billion birr allocated for regional subsidies.

The government projects income of 612.7 billion birr, with tax revenue expected to contribute 502 billion birr and non-tax income 61.6 billion birr. Sector budget support is anticipated to bring in 7.3 billion birr, with aid and grants expected to add 41.8 billion birr.

Economic Outlook

Ethiopia’s economy is forecasted to expand by 8.4% in the coming fiscal year, up from an expected 7.9% growth rate in the current period. The budget increase is designed to support this growth trajectory by enhancing public investment and stimulating economic activity.

“Our partnership with the IMF and other international financial institutions will be key to ensuring Ethiopia’s economic resilience and sustainable growth,” Minister Shide concluded. “We are committed to implementing the necessary reforms to secure a brighter economic future for our country.”

As Ethiopia navigates its economic challenges, the government’s proactive approach to increasing spending and engaging with the IMF reflects a strategic effort to restore fiscal stability and drive long-term economic development.

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