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Oil Sector Contribution Falls as GDP Moves by 0.20%

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CEM REPORT, ECONOMY | Nigeria’s Gross Domestic Product (GDP) has recorded a 0.20 per cent growth to 2.51 per cent in the second quarter of 2023 (Q2’23) from 2.31 per cent recorded in the previous quarter of the year.

The major driver of the economy for Q2’23 is the services sector, which recorded a growth of 4.42 per cent and contributed 58.42 per cent to the aggregate GDP.

According to the Second Quarter GDP Report released by the National Bureau of Statistics (NBS) on Friday, the growth rate is lower than the 3.54 per cent recorded in the second quarter of 2022.

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In Q2 2023, real GDP shrank by 0.17 per cent from the previous quarter due to lower-than-expected levels of economic activity production.

The NBS estimates that real GDP was ₦17.72 trillion in Q2, up from ₦17.28 trillion in Q2 2022 but down from ₦17.75 trillion in Q1.

“This highlighted the shortfall in production level in the quarter under review when compared with the previous quarters of Q1 2023 but higher than the corresponding quarter of Q2 2022.”

In Q2, nominal GDP (current price) was ₦52.10 trillion, representing a nominal growth rate of 15.77 per cent year on year. This was more than the ₦45 trillion reported in Q2 2022 and the ₦51.24 trillion recorded in the previous quarter.

“This performance is higher when compared to the second quarter of 2022, which recorded aggregate GDP of N45, 004,520.89 million, indicating a year-on-year nominal growth of 15.77 per cent.”

Furthermore, the report stated that the agriculture sector grew by 1.50 per cent, an improvement from the growth of 1.20 per cent recorded in the second quarter of 2022.

According to the data, the industry sector grew by -1.94 per cent compared to -2.30 per cent in the second quarter of 2022.

In terms of GDP contribution, the bureau reported that the agricultural and industrial sectors contributed less to aggregate GDP in the second quarter of 2023 compared to the second quarter of 2022.

The manufacturing sector contributed 8.62 per cent to GDP in Q2, lower than 10.13 per cent in the preceding quarter and 8.65 per cent in Q2 2022.

In addition, trade contributed 16.80 to GDP, in Q2, higher than the 15.97 per cent recorded in Q1, but lower than 16.81 per cent recorded in the previous year.

The oil sector contributed 5.34 per cent to GDP, down from 6.21 per cent in the preceding quarter as well as 6.33 per cent in Q2 2022.

On the other hand, the non-oil sector contributed 94.66 per cent to the economy in Q2, higher than 93.79 per cent in the preceding quarter and 93.67 per cent in Q2 2022.

Oil sector

The bureau noted that the nation in the second quarter of 2023 recorded an average daily oil production of 1.22 million barrels per day (mbpd), lower than the daily average production of 1.43 mbpd recorded in the same quarter of 2022 by 0.22 mbpd and lower than the first quarter of 2023 production volume of 1.51 mbpd by 0.29 mbpd.

It said the real growth of the oil sector was –13.43 per cent (year-on-year) in Q2 2023, indicating a decrease of 1.66 per cent points relative to the rate recorded in the corresponding quarter of 2022 (-11.77%).

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The NBS said the growth also decreased by 9.22 per cent points compared to Q1 2023, which was –4.21 per cent.

“On a quarter-on-quarter basis, the oil sector recorded a growth rate of -14.12 per cent in Q2 2023.

“The Oil sector contributed 5.34 per cent to the total real GDP in Q2 2023, down from the figure recorded in the corresponding period of 2022 and down from the preceding quarter, where it contributed 6.33 per cent and 6.21 per cent respectively,” the report said.

Non-oil sector

The non-oil sector grew by 3.58 per cent in real terms during the reference quarter (Q2 2023).

The NBS said this rate was lower by 1.19 per cent points compared to the rate recorded in the same quarter of 2022 and 0.81 per cent points higher than the first quarter of 2023.

“This sector was driven in the second quarter of 2023 mainly by information and communication (telecommunication), financial and insurance (financial institutions); trade, agriculture (crop production); manufacturing (food, beverage & tobacco), construction; and real estate, accounting for positive GDP growth,” the NBS said.

In real terms, it said the non-oil sector contributed 94.66 per cent to the nation’s GDP in the second quarter of 2023, higher than the share recorded in the second quarter of 2022, which was 93.67 per cent and higher than the first quarter of 2023 recorded as 93.79 per cent.

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