Service sector leads as Nigeria’s economy expand by 3.5% – NBS
Omeiza Bilal with agency report
The country’s economy grew by about 3.5 per cent in the third quarter of this year, fueled by activities in the service sector.
According to the data published by the National Bureau of Statistics (NBS) Monday, the Nigerian economy expanded in real term by 3.5 per cent year-on-year (y/y) in the third quarter of:2024, outpacing analysts’ base case projection for the period by 0.34ppt.
On a quarter-on-quarter (q/q) basis, real growth culminated at 10.0 per cent (fastest since 12.0 per cent in the third quarter of 2023), aided in part by low base period effect (q/q real growth came in at a muted 3bps in Q2).
According to analysts from Afrinvest, “from a structural perspective, the real GDP growth was jointly driven by sturdy expansion in both the oil and non-oil segments. Precisely, the oil economy expanded for the third consecutive quarter since the pandemic by 5.2 per cent y/y, though the momentum trailed first and second quarter pf:2024 performances of 5.7 per cent and 10.2 per cent, respectively.
“We note that the average daily crude oil output also improved modestly in the third quarter to 1.47mbpd compared to 1.41mbpd in second quarter. Notwithstanding, the crude oil output level remains significantly short of the 1.78mbpd baseline set in the 2024 budget, and the 13-quarter peak of 1.57mbpd achieved in Q1:2024, said Afrinvest.
Despite the pickup in growth, from 3.19% in the second quarter and 2.98 per cent in the first, it was still short of the six per cent target set by President Bola Tinubu when he took office last year in Africa’s most populous nation and top oil producer.
Tinubu’s lightning reform push in the first weeks of his administration sparked hope that he could finally unleash the full potential of Africa’s sluggish economic giant.
But 18 months on, the key planks of his economic overhaul – devaluing the naira and scrapping subsidies – have triggered the worst cost-of-living crisis in a generation and are yet to translate into much faster growth.
From a sectoral perspective, the services sector remains the leading driver of the overall economy growth, up 5.2 per cent y/y compared to 3.8% in the second quarter of 2024. Trailing, the industries and agriculture sector growth culminated at 2.2 per cent and 1.1 per cent sequentially, down from 3.5 per cent and 1.4 per cent in the second quarter of 2024. We flag that the slowdown in the agricultural sector growth underscores the currently elevated food inflation rate (Oct 2024: 39.2 per cent).
“Likewise, we linked the slowdown in industries sector growth momentum to the reverberating effect of the increase in energy goods prices (PMS price rose from N750.00/litre in the second quarter to N1,060/litre in the third quarter) and further pressure on the foreign exchange (forex) rate in the quarter – the NAFEM and parallel market rates fell by 2.4 per cent and 10.4 per cent in the third quarter to N1,541.94/$ and N1,680.00/$ respectively.
