- PwC: Nigeria’s Real GDP ’ll Recover Fully by 2019
Nigeria’s real Gross Domestic Product (GDP)will attain full recovery in two years, with growth moving closer to its long-term trend of 6.7 per cent, PricewaterhouseCoopers (PwC Nigeria Limited) has projected.
The firm in its routine economic alert titled: “Nigeria’s Q2’17 GDP: From Recession to Recovery” released at the weekend, said latest GDP figures released by the National Bureau of Statistics (NBS) indicate that Nigeria’s economy has exited recession.
PwC in the report by its Partner & Chief Economist Dr. Andrew S Nevin and Economist Adedayo Akinbiyi said in Q2 2017, Nigeria’s economy returned to positive growth as real GDP grew 0.5 per cent year-on-year(y/y) after successive declines for five quarters.
The report noted that this recovery was supported by a strong rebound in the oil sector (8.8 per cent of GDP), which expanded by 1.6 per cent y/y (–15.6 per cent y/y in Q1 2017).
The firm also said the non-oil sector on the other hand was boosted by a strengthening of the broader manufacturing sector, reflecting impact of improved foreign exchange liquidity.
“We note that the Q1 2017 real GDP growth was revised down to -0.9 per cent y/y (previous: -0.5 per cent y/y); a revision necessitated by lower than estimated oil production figures for March 2017, which dragged oil output lower,” PwC said.
The report also provided an analysed key insights from the latest GDP figures as it affects selected sectors and also made projections for the future.
It said, for instance, that agriculture decelerated on grain scarcity, expanding at a slower pace for the fifth consecutive quarter, recording a growth of 3.0 per cent y/y in Q2 2017 (Q1’1 7 : 3.4 per cent and Q2 2016: 4.5 per cent).
According to PwC, “This trend has been driven mainly by weaker output in the livestock and fishing sub-sectors, resulting from the scarcity of grains.
“In addition, we suspect the second quarter resurgence in insecurity in the North East might have negatively impacted crop production activities.
“This explains the trend in food inflation, which spiked to a seven-year high of 20.3 per cent y/y in July 2017.”
Similarly, manufacturing expanded at a slower pacefor the second consecutive quarter. Real growth increased by 0.6 per cent y/y in Q2 2017, relative to -3.3 per cent y/y a year earlier.
Relative to Q1 2017, however, growth slowed from 1.3 per cent y/y, a reflection of the performance of sector heavy weights, food, beverage and tobacco and cement, which accounted for 54.0 per cent of manufacturing GDP.
“Whilst the broader sector appears to have benefitted from the improved availability of forex, we suspect the price increases implemented across most consumer companies in the course of the year might have impacted volumes.
“Nonetheless, quarterly data (Q2 2017:1.0 per cent q/q vs Q1 2017: -5.0 per cent q/q) suggests the consumer recovery remains underway, albeit fragile,” the firm said.
PwC said its 2017 GDP forecast remained unchanged at 0.7 per cent y/y. “To attain this growth forecast, we estimate that real GDP will expand by 1.8 per cent y/y in Q3 2017 and 1.1 per cent y/y in Q4 2017,” it stated.
The firm said “This is plausible, given our expectation of a strong harvest season and sustained FX liquidity, which should support a broad-based economic recovery.”
It, however, added that risks to its forecast include a decline in oil price and production, and policy disruptions, which could hamper investment flows to the economy.
