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Oil production hits four-year low, ICT sustains resilience… takeaways from Nigeria’s Q3 GDP report

Oil production hits four-year low, ICT sustains resilience… takeaways from Nigeria’s Q3 GDP report
November 21
17:11 2020

Figures from the third-quarter gross domestic product (GDP) report released by the National Bureau of Statistics (NBS) on Saturday, show that out of 46 economic activities, 17 recorded positive growth, while 29 contracted.

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Nigeria, Africa’s largest economy, officially slumped into a recession — the worst in 33 years — following the second consecutive economic contraction for the year.

Nigeria shrank 3.6 percent in three months (July to September), having earlier recorded a 6.1 percent contraction between April and June. An economy is officially declared to be in recession after two consecutive quarters of negative economic growth as measured by a country’s GDP. 

The report shows that Nigeria’s average daily oil production in third quarter (Q3) stood at 1.67 million barrels per day (mbpd), from 1.81 mbpd in the previous three months — this is the lowest since the third quarter in 2016. Nigeria cut oil production to meet OPEC+ compliance.

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Real growth for the oil sector contracted at 13.89 percent in Q3 — indicating a sharp contraction of 20.38 percent points relative to the rate recorded in the corresponding quarter of 2019.

The oil sector contributed 8.73 percent to total real GDP in Q3, down from 9.77 percent and 8.93 percent, respectively, recorded in the corresponding period of 2019 and the preceding Q2 2020.

The non-oil sector grew by -2.51 percent in real terms during the quarter, which is -4.36 percent points lower than the rate recorded in Q3 2019, but 3.54 percent points higher than in the second quarter of 2020.

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Non-oil sector grew by -2.51 percent in real terms during the quarter, which is -4.36 percent points lower than the rate recorded in Q3 2019. 

In real terms, the non-oil sector contributed 91.27 percent to the nation’s GDP in the third quarter, higher than its share in the third quarter of 2019 (90.23 percent) and Q2 (91.07 percent).

The non-oil sector was driven mainly by information and communication (telecommunications), with other drivers being agriculture (crop production), construction, financial and insurance (financial institutions), and public administration.

The information and communication sector grew by 14.56 percent in Q3 from 16.52 percent in Q2 2020 and 9.88 percent in Q3 2019, driven by a 17.36 percent growth in telecommunications and information services.

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Information and communication sector accounted for 13.47 percent of the total GDP as at Q3 2020, compared to 17.83 percent contribution in the preceding quarter.

The agriculture sector continued on its positive growth at 1.39 percent, a drop from 1.58 percent recorded in the second quarter. 

Of the four sub-activities that make up the agriculture sector, three (crop production, livestock, forestry) recorded positive growth, while the fishing sub-sector recorded negative growth.

Crop production remained the major driver of the sector, accounting for 92.93 percent of the overall nominal growth of the sector in the third quarter of 2020.

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In terms of contribution, the sector contributed 30.77 percent to overall GDP in real terms in Q3 2020, higher than the contribution in the third quarter of 2019 and the second quarter of 2020 which stood at 29.25 percent and 24.65 percent, respectively.

The manufacturing sector contracted by 1.51 percent in Q3 2020 from 8.78 percent in Q2 2020 and 1.1 percent in Q3 2019. Of the 13 activities that make up the sector, four sub-sectors recorded positive growth. These include cement at 11.96 percent; food, beverage, and tobacco (5.57 percent); chemical and pharmaceutical products (6.60 percent); motor vehicles and assembly (7.03 percent).

The construction sector grew by 2.84 percent in Q3 2020 from a contraction of 31.77 percent in Q2 2020 and 2.37 percent in Q3 2019.

Financial and insurance sector grew by 3.21 percent in Q3 2020 from 18.49 percent in Q2 2020, driven by the financial services which grew at 6.8 percent in Q3 2020 from 28.41 percent in Q2 2020.

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The finance and insurance sector consists of the two subsectors — financial institutions and insurance, which accounted for 88.89 percent and 11.11 percent of the sector in real terms in Q3 2020.

The contribution of finance and insurance to real GDP reached 2.67 percent, higher than the contribution of 2.49 percent recorded in the third quarter of 2019.

On the other hand, the trade sector contracted by 12.12 percent in Q3 2020 from 16.59 percent in Q2 2020 and 1.45 percent in Q3 2019.

Air transport under the transportation and storage sector also contracted by 38.86 percent in Q3 2020 from 57.38 percent in Q2 2020 and 15.23 percent in Q3 2019.

The real estate sector continued in recession contracting by 13.4 percent in Q3 2020 from 21.99 percent in Q2 2020 and 2.31 percent in Q3 2019.

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