Economic recovery remains lackluster... Real GDP growth improved to 2.4% (Q3'18: 1.8%), sustaining its quarterly climb from Q2'18. The marginal improvement in GDP continues to be driven wholly by expansion in non-oil sector activities, which grew further to 2.7%. This time around, the agriculture sector also contributed to the sustained improvement in the sector, even as the services sector continues to undergird non-oil growth. However, when compared with the corresponding quarter in 2017 (Q4'17: 2.1%), GDP growth was marginal. This indicates that the country's economic recovery remains flat and below expectations. Read our detailed analysis of Nigeria's Q4'18 GDP figures and other economic projections in our latest Nigeria Economic Alert.

1. Economic recovery remains lackluster
Real GDP growth improved to 2.4% (Q3'18: 1.8%), sustaining its
quarterly climb from Q2'18. The marginal improvement in GDP continues
to be driven wholly by expansion in non-oil sector activities, which grew
further to 2.7%. This time around, the agriculture sector also contributed
to the sustained improvement in the sector, even as the services sector
continues to undergird non-oil growth. However, when compared with
the corresponding quarter in 2017 (Q4'17: 2.1%), GDP growth was
marginal. This indicates that the country's economic recovery remains
flat and below expectations.
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Contribution to real GDP growth
Source: NBS, PwC analysis
Nigeria Economic Alert
Q4'18 GDP report: Economic recovery loses
momentum despite quarterly growth
21 February 2018
Activities in the oil sector continue to shrink with weak growth
recorded in the last 3 quarters. The sector continued its downward
trajectory of declined growth to 1.6% y/y in Q4'18, as oil production
remains below the 2 million mbpd average achieved in Q1'18. Current
oil production was at 1.75 mbpd while oil prices stood at an average
of US$67.7 average in Q4'18.
Agricultural output improves as a reflection of the crop harvest
season
Agriculture GDP increased marginally by 2.5% (Q3'18:1.9%). Agriculture
output generally peaks in Q4, a reflection of the crop harvest season.
However, when compared to growth in Q4'17 of 4.2% y/y, the 2018
harvests were lackluster and characterized by lower crop output. Since
2013, the sector's contribution to GDP has remained almost flat on
account of low yields, which has been further exacerbated by internal
conflicts, as well as the impact of climate change.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
-5
0
5
10
15
20
Q4'17 Q1'18 Q2'18 Q3'18 Q4'18
Non-Oil GDP Oil GDP Real GDP
Nigeria, crude oil production vs price (quarterly)
Source: NBS, PwC analysis
Manufacturing activities sustain recovery supported by currency
stability
Manufacturing activities expanded to 2.4% from 1.9% in Q3'18. The
improvement in manufacturing activities could be attributed to increased
FX liquidity and sustained exchange rate stability.
Exchange rate
Source: CBN, PwC Analysis
Overdue reforms continue to derail return to long term growth rate
In our previous economic report, we stated that despite our expectation
of stronger growth in 2018, we believed the prolonged delay in
implementing overdue reforms in the economy will continue to drag
growth. Some of these reforms include: slow progress with the power
sector reforms, absence of full deregulation of the downstream
petroleum sector and the multiplicity of exchange rates, which constrains
investments and makes the economy vulnerable to shocks in the oil
sector. Subsequently, growth for 2018 remains below the long-term
economic and population growth rates of 6.7% and 2.7% respectively. All
of the aforementioned issues coupled with lower oil production remain
key downside risks to sustained economic recovery, especially in 2019.
0
100
200
300
400
500
600
Interbank (NGN/USD) Parallel Market (NGN/USD) I&E Window (NGN/USD)
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
1,796
1,653
1,705
1,750
62
64
66
68
70
72
74
76
78
1,550
1,600
1,650
1,700
1,750
1,800
1,850
Q1 2018 Q2 2018 Q3 2018 Q4 2018
Oil production ('000 bpd) Oil price (US$ per barrel)
Andrew S Nevin (PhD)
Partner & Chief Economist
PwC Nigeria
andrew.x.nevin@pwc.com
Omomia Omosomi
Senior Industry Analyst
PwC Nigeria
omomia.omosomi@pwc.com
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