The Gross Domestic Product (GDP) in Nigeria was worth 448.10 billion US dollars in 2019, according to official data from the World Bank and projections from Trading Economics. The GDP value of Nigeria represents 0.37 percent of the world economy.
The effects the coronavirus pandemic has had on Africa’s largest economy is starting to show in data. Nigeria’s economy contracted by 6.1% year on year in the second quarter of this year, latest reports from Nigeria’s statistics bureau show. The dip follows thirteen quarters of positive but low growth rates. The -6.1% decline is also Nigeria’s steepest in the last 10 years.
According to the numbers contained in the GDP report, the performance recorded in Q2 2020 represents a drop of 8.22% points when compared to Q2 2019 (2.12%), and 7.97% points decline when compared to Q1 2020 (1.87%). Apparently, the significant drop reflects the negative impacts of the disruption caused by COVID-19 pandemic and crash in oil price on the Nigerian economy.
As with most other economies around the world, the sharp drop in Nigeria’s GDP growth is largely down to the slowdown in economic activity after the country resorted to a lockdown back in April to curb the spread of the virus. In the wake of the pandemic the World Bank forecast a decline of -3.2% for 2020—a five percentage point drop from its previous projections. The latest GDP number shows that Nigeria’s biggest revenue earner, oil sector, recorded
6.63% (year-on-year) contraction in Q2 2020, indicating a decrease of –13.80% points relative to the rate recorded in the corresponding quarter of 2019.
- i) Quarter-on-Quarter, the oil sector recorded a growth rate of –10.82% in Q2 2020.
- ii) The Oil sector contributed a meagre 8.93% to total real GDP in Q2 2020, down from figures recorded in the corresponding period of 2019 (8.98%) and the preceding quarter (9.50%)
iii) In the second quarter of 2020, an average daily oil production of 1.81 million barrels per day (mbpd) was recorded. This was -0.21mbpd lower than the daily average production of 2.02mbpd recorded in the same quarter of 2019, and –0.26mbpd lower than the first quarter 2020 production volume of 2.07mbpd
The sharp drop in Nigeria’s GDP growth rate
Non-Oil Sector shrinks, as accommodation, construction, others contract
The non-oil sector declined by –6.05% in real terms during the reference quarter (Q2 2020). It was the first decline in real non-oil GDP growth rate since Q3 2017.
- i) According to the report, non-oil sector grew at –7.70% points lower compared to the rate recorded during the same quarter of 2019, and –7.60% points compared to the first quarter of 2020.
- ii) Sectors which recorded the highest negative growth in Q2 2020 include Transport and Storage, Accommodation and Food Services, Construction, Education, Real estate and Trade among others.
iii) In real terms, the Non-Oil sector accounted for 91.07% of aggregate GDP in the second quarter of 2020, slightly higher than the share recorded in the second quarter of 2019 (91.02%) as well as the first quarter of 2020 (90.50%).
- iv) Nevertheless, growth in non-oil sector output was driven by Financial and Insurance (Financial Institutions), Information and Communication (Telecommunications), Agriculture (Crop Production), and Public Administration, moderating the economy-wide decline.