Connect with us

Finance

Nigerian economy slips into recession; second time in four years

 as GDP falls by -3.63% in Q3 2020 – National Bureau of Statistics

Report by David Oladele

Published

on

Recession
Nigerian economy has plunged into recession as the country’s gross domestic product (GDP) decreased by –3.62% (year-on-year) in third quarter of 2020 while this represents an improvement of 2.48% points over the –6.10% growth rate recorded in the preceding quarter (Q2 2020).

This was contained in the NBS’ third quarter (Q3) GDP report and released on Saturday, November 21.

The report stated that growth in Q3 2020 was slower by 5.90% points when compared to the third quarter of 2019 which recorded a real growth rate of 2.28% year on year.

Recall that the nation’s economy slipped into recession in August 2016, with the growth figures showing the economy contracted 2.06% between April and June of that year.

With the latest report from the NBS, this will make it the second time in four years that the country will witness recession.

Read the Full Report Below:

Cumulatively, the economy has contracted by -2.48% While this represents an improvement of 2.48% points over the –6.10% growth rate recorded in the preceding quarter (Q2 2020), it also indicates that two consecutive quarters of negative growth have been recorded in 2020.

Furthermore, growth in Q3 2020 was slower by 5.90% points when compared to the third quarter of 2019 which recorded a real growth rate of 2.28% year on year.

The performance of the economy in Q3 2020 reflected residual effects of the restrictions to movement and economic activity implemented across the country in early Q2 in response to the COVID-19 pandemic.

As these restrictions were lifted, businesses re-opened and international travel and trading activities resumed, some economic activities have returned to positive growth.

A total of 18 economic activities recorded positive growth in Q3 2020, compared to 13 activities in Q2 2020. During the quarter under review, aggregate GDP stood at N39,089,460.61 million in nominal terms.

This performance was 3.39% higher when compared to the third quarter of 2019 which recorded an aggregate of N37,806,924.41 million.

This rate was, however, lower relative to growth recorded in the third quarter of 2019 by –9.91% points but higher than the proceeding quarter by 6.19% points.

For clarity, the Nigerian economy has been broadly classified into the oil and non-oil sectors.

Information & Communication

The Information and Communication sector is composed of the four activities of Telecommunications and Information Services; Publishing; Motion Picture, Sound Recording and Music Production; and Broadcasting. Of total real GDP, the sector accounted for 13.47% as at Q3 2020, compared to 17.83% contribution in the preceding quarter.

The Information and Communications sector contributed 9.57% to total nominal GDP in Q3 2020, higher than 8.54% recorded in the same quarter of 2019 but lower than the 14.06% it contributed in the preceding quarter.

In real terms, the Information and Communications sector recorded a growth rate of 14.56%, year on year, an increase of 4.68% points compared to the previous year. Quarter on quarter, the sector exhibited a growth of –15.29% in real terms.

In nominal terms, Information and Communication sectors growth was recorded at 15.91% (year-onyear), a 4.72% points increase from the rate of 11.19% recorded in the same quarter of 2019, and 17.06% points higher than rate recorded in the preceding quarter. The quarter on quarter growth rate was – 21.78%.

The Oil Sector

The average daily oil production recorded in the third quarter of 2020 stood at 1.67 million barrels per day (mbpd), or 0.37mbpd lower than the average production recorded in the same quarter of 2019 and 0.14mbpd lower than production volume recorded in the second quarter of 2020.

Real growth for the oil sector was –13.89% (year-on-year) in Q3 2020, indicating a sharp contraction of –20.38% points relative to the rate recorded in the corresponding quarter of 2019.

Furthermore, real oil growth decreased by –7.26% points when compared with oil sector growth recorded in Q2 2020 (6.63%).

Quarter on quarter however, the oil sector recorded a growth rate of 9.64% in Q3 2020.

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

Non Oil Sector

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

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.

In real terms, the non-oil sector contributed 91.27% to the nation’s GDP in the third quarter of 2020, higher than its share in the third quarter of 2019 (90.23% ) and the second quarter of 2020 (91.07%).

Agriculture Sector

Four sub-activities make up the Agricultural sector: Crop Production, Livestock, Forestry and Fishing. sector grew by 13.52 % year-on-year in nominal terms in Q3 2020, showing a decline of –1.36% points from the same quarter of 2019. Compared to growth in the preceding quarter (19.90%), this represented a drop of –6.38% points. Crop Production remained the major driver of the sector, accounting for 92.93% of overall nominal growth of the sector in third quarter 2020.

ALSO READ  Shopping smart in the face of looming recession

Quarter on quarter growth stood at 36.45% in Q3 2020. Agriculture contributed 28.41% to nominal GDP in the third quarter of 2020. This figure was higher than the rates recorded for the third quarter of 2019 and higher than the second quarter of 2020 which recorded 25.88% and 23.92% respectively.

In the third quarter of 2020, the agricultural sector grew by 1.39% (year-on-year) in real terms, a drop of 0.89% points from the corresponding period of 2019, and a decrease of –0.19% points from the preceding quarter. On a quarter on quarter basis, agriculture GDP grew 39.95%.

In terms of contribution, the sector contributed 30.77% 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% and 24.65% respectively.

Manufacturing Sector

The Manufacturing sector is comprised of thirteen activities: Oil Refining; Cement; Food, Beverages and Tobacco; Textile, Apparel, and Footwear; Wood and Wood products; Pulp Paper and Paper products; Chemical and Pharmaceutical products; Non-metallic Products, Plastic and Rubber products; Electrical and Electronic, Basic Metal and Iron and Steel; Motor Vehicles and Assembly; and Other Manufacturing.

In nominal terms, Manufacturing sector GDP growth, in the third quarter of 2020, was recorded at 13.54% (year-on-year), -26.15% points lower than figure recorded in the corresponding period of 2019 (39.69%) and 13.68% points higher than the preceding quarter’s figure of -0.14%. Quarter on quarter growth of the sector was recorded at 32.13%.

The contribution of Manufacturing to nominal GDP in Q3 2020 was 13.56%, higher than in the corresponding period of 2019 (12.34%) and the second quarter of 2020 (11.79%).

Real GDP growth in the manufacturing sector, in the third quarter of 2020, was –1.51% (year on year), lower than the same quarter of 2019 but higher than the preceding quarter by –2.60% points and 7.27% points respectively.

Growth rate of the sector on a quarter-on-quarter basis stood at 13.52%, higher than the quarter on quarter growth rate recorded in the preceding quarter of 2020. Real contribution to GDP in 2020 third quarter was 8.93%, higher than the 8.74% recorded in third quarter of 2019 and higher than the 8.82 recorded in second quarter 2020.

Electricity, Gas, Steam and Air Conditioning Supply

The Electricity, Gas, Steam and Air conditioning Supply sector recorded a year on year growth of –0.01% in the third quarter of 2020.

This was –12.84% points lower than the 12.83% growth rate recorded in the corresponding quarter of 2019, and –8.65% points lower than the growth rate of 8.64% recorded in the quarter before. Quarter on quarter, the sector recorded a growth rate of –13.77% in Q3 2020.

The contribution of Electricity, Gas, Steam and Air Conditioning Supply to Nominal GDP in the third quarter of 2020 was 0.69%, lower than the contribution in the corresponding quarter of 2019 as well as in the preceding quarter.

In real terms, the sector contracted by –3.66% in Q3 2020, but this was still an improvement compared to the growth rate of –11.81% recorded in the same quarter of 2019.

When compared to the immediate past quarter, this was a decrease of –0.66% points from –3.00% recorded. Quarter on quarter, the sector grew at a rate of –14.32%.

The contribution of this sector to real GDP in Q3 2020 was 0.36%, relatively same as in 2019 but lower than the contribution of 0.47% in the preceding quarter.

Construction

The Construction sector grew 35.50% in nominal terms (year on year) in Q3 2020, a drop of –13.30% points compared to 48.80% recorded in the same quarter of 2019. There was an increase of 38.70% points when compared to the rate recorded in the preceding quarter. Nominal growth quarter on quarter was recorded at 21.73%. Construction contributed 7.23% to nominal GDP in the third quarter of 2020, higher than the 5.52% it contributed a year earlier and the 6.83% contributed in the second quarter of 2020.

The real growth rate of the construction sector in the third quarter of 2020 was recorded at 2.84% (year on year), higher by 0.47% points from the rate recorded a year earlier.

Relative to the preceding quarter, there was an increase of 34.61% points. Quarter on quarter, the sector grew by 11.54% in real terms, higher (by 37.53% points) than the –25.99% it recorded in third quarter 2019 and higher than the –24.77% recorded in Q2 2020 (by 36.31%).

Its contribution to total real GDP was 3.21% in the third quarter 2020, which is higher than its contribution of 3.01% in the same quarter of the previous year, and lower than in the immediate past quarter where it contributed 3.23%.

ALSO READ  TechEconomyTV

Trade

In the third quarter of 2020, the nominal year on year growth rate of Trade stood at –9.82%. This indicates a decrease by –10.95% points when compared to the third quarter of 2019 and 5.13% points higher than the preceding quarter. The quarter on quarter growth rate was 9.72%.

Trade’s contribution to nominal GDP in the third quarter of 2020 was 12.81%, lower than the contribution in the same quarter of the previous year of 14.69%, and the preceding quarter recorded at 13.41% In real terms, Trade’s year on year growth stood at –12.12%, which was –10.67% points lower than the rate recorded the previous year, but 4.46% points higher than in the preceding quarter at –16.59% growth rate.

Quarter on quarter growth stood at 9.01%. In real terms, Trade’s contribution to GDP was 13.88%, lower than the 15.23% it represented in the previous year, and the 14.28% recorded in 2020.

Accommodation and Food Services

In nominal terms, Accommodation and Food Services grew by –9.64% year on year in Q3 2020, indicating a decline of –29.07% points relative to Q3 2019.

However, the Q3 2020 growth was higher than the preceding quarter by 20.52% points when growth was –30.16%. Quarter on quarter growth stood at 99.42%.

Accommodation and Food Services contribution to nominal GDP stood at 0.83% in Q3 2020.

In real terms, Accommodation and Food Services contracted by –22.61%, compared to a growth rate of 2.28% recorded in the previous year.

Relative to the preceding quarter, growth rate was 17.58% points higher. Quarter on quarter, real growth was 91.84%, The sector accounted for 0.70% of real GDP, compared to 0.87% last year and 0.41% in the preceding quarter.

Transportation and Storage

Six activities make up the Transportation and Storage sector: Road Transport; Rail Transport and Pipelines; Water Transport; Air Transport; Transport Services; and Post and Courier Services.

In the third quarter of 2020, the sector contracted by –35.06% in nominal terms (year on year) as it sought to gradually recover from the restricted movements of passenger and goods.

The growth rate in Q3 was slightly better than the preceding quarter which saw contraction of -41.63%.

All activities under Transport and Storage industry recorded negative growth rates except Post and Courier Services. Quarter on quarter, growth stood at 29.69%.

Transport activities contributed 1.28% to Nominal GDP in Q3 2020, a decline from the 2.03% recorded in the corresponding period of 2019, but higher than 1.13% recorded in the second quarter of 2020.

In real terms, the Transportation and Storage sector contracted by –42.98% in Q3 2020, a slightly better performance than the preceding quarter when it recorded –49.23%, an increase of 6.25% points.

Quarter on quarter, growth was 25.81%. Furthermore, the sector contributed 0.84% to real GDP in Q3 2020.

Arts, Entertainment and Recreation

In nominal terms, Arts, Entertainment and Recreation sector recorded a growth rate of –4.04% in the third quarter of 2020 (year-on-year), representing an increase of 15.06% points relative to the preceding quarter, but a decrease of –7.61% points compared with the preceding year.

On quarter on quarter basis, growth was recorded at -6.15%. Nevertheless, this activity contributed 0.15% to total nominal GDP in the third quarter of 2020, slightly lower than the 0.16% it contributed in Q3 2019 and 0.18% contributed in Q2 of 2020.

In real terms, the activity grew by –4.67% year on year, less than the rate recorded in Q3 2019 by –7.56% points, but higher by 4.26% points when compared with that of the preceding quarter.

Quarter on quarter, growth stood at –6.31% in real terms, higher than the quarter-on-quarter growth rate recorded in Q3 2019 at –10.49%.

Overall, Art, Entertainment and Recreation contributed 0.19% to real GDP in Q3 2020, same as it recorded the previous year, but lower than 0.22% recorded in the preceding quarter.

Real Estate Services

In nominal terms, Real Estate Services recorded a growth rate of –8.06% in the third quarter of 2020, indicating a decline of –11.78% points compared to the growth rate at the same period in 2019, and by 9.12% points when compared to the preceding quarter. Quarter-on-quarter, the sector growth rate was 18.92%.

Real GDP growth recorded in the sector in Q3 2020 stood at -13.40%, lower than the growth recorded in third quarter of 2019 by –11.09% points, but higher relative to Q2 2020 by 8.59% points.

Quarter-onquarter, the sector grew by 17.15% in the third quarter of 2020. It contributed 5.58% to real GDP in Q3 2020, lower than the 6.21% it recorded in the corresponding quarter of 2019.

Finance and Insurance

The Finance and Insurance Sector consists of the two subsectors, Financial Institutions and Insurance, which accounted for 88.89% and 11.11% of the sector in real terms in Q3 2020. As a whole, the sector grew at 5.91% in nominal terms (year on year), with the growth rate of Financial Institutions at 9.60% and –16.54% growth rate recorded for Insurance. The overall rate was higher than that in Q3 2019 by 2.20% points, but –14.91% points lower than the preceding quarter. Quarter on quarter, growth was -24.76%. The sector’s contribution to the overall nominal GDP was 2.46% in Q3 2020, higher than the 2.40% it represented a year prior, but lower than the contribution of 3.76 % it made in the preceding quarter.

ALSO READ  #NES26: What Nigeria Must Do to Get Out of Recession - Asue Ighodalo

In real terms, growth in this sector was estimated at 3.21% during Q3 2020, or 2.14% points from the rate recorded in the third quarter, though down by –15.29% points from the rate recorded in the preceding quarter. Quarter on quarter growth in real terms stood at –25.24%.

The contribution of Finance and Insurance to real GDP reached 2.67%, higher than the contribution of 2.49% recorded in the third quarter of 2019, but 1.33% points lower than 4.00% recorded in Q2 2020.

Education

Nominal growth in the Education sector in the third quarter of 2020 was –15.75% (year-on-year), down –23.31% points from the 7.56% reported in the corresponding quarter of 2019, but up by 6.33% points when compared to Q2 2020 growth rate of –22.09%.

The contribution of Education to nominal GDP in Q3 2020 was 1.64%, lower compared to 2.02% estimated in Q3 2019 but higher than 1.37% in Q2 2020.

Real growth in Education year-on-year stood at -20.74% in Q3 2020, a decrease of –21.93% points from the corresponding quarter of 2019 which was estimated at 1.19%. When compared with the previous quarter’s growth rate of -24.12%, the Q3 growth rate was 3.38% points higher. The Sector contributed 1.74% to total real GDP in Q3 2020, lower than 2.12% reported for the corresponding quarter in 2019.

Public Administration

In nominal terms, the Public Administration sector grew by 6.29% in Q3 2020, or 3.05% points higher than the corresponding quarter of 2019 and 2.27% points higher relative to Q2 2020. Quarter on quarter, the sector grew by 2.37%.

The contribution of Public Administration to nominal GDP stood at 1.97% in Q3 2020, higher than the 1.92% recorded in Q3 2019, but 0.24% points lower than the 2.21% recorded in Q2 2020.

In real terms, the sector recorded a growth rate of 3.58% (year on year) in Q3 2020, which is 2.97% points and 1.56% points higher than the Q3 2019 and Q2 2020 growth rates respectively.

On quarter on quarter basis, the sector grew by 1.71% in Q3 2020. The contribution of Public Administration to real GDP stood at 2.14 % in Q3 2020, higher than 1.99% recorded in Q3 2019 but a decrease from 2.36% recorded in Q2 2020.

Human Health and Social Services

The year on year growth rate for Human Health and Social Services in nominal terms was 8.90%, higher than the growth rate of 6.83% reported for the same quarter in 2019 by 2.08% points. Quarter on quarter, growth was 0.96%.

The contribution to nominal GDP was 0.62% in Q3 2020, higher than the 0.58% recorded in Q3 2019 but down from the 0.70% recorded in Q2 2020.

Real GDP growth of Human Health and Social Services for Q3 2020 stood at 2.82% (year-on-year) compared to 0.86% for the corresponding period of 2019. Quarter-on-quarter, the sector grew by – 0.48%.

The contribution of Human Health and Social Services to real GDP was 0.68% in Q3 2020, higher than the figure recorded in Q3 2019 but down from the 0.77% recorded for the preceding quarter.

Other Services

In nominal terms, Other Services grew by –5.11% (year-on-year) in Q3 2020. This growth rate was lower than the 3.68% growth rate recorded in the same quarter of the previous year, but higher than the growth rate of –13.40% recorded in Q2 2020. Quarter on quarter growth was –5.18%.

This sector contributed 2.23% to the aggregate nominal GDP in Q3 2020, lower than the 2.43% it contributed in the same period of the previous year and the 2.70% it contributed in the preceding quarter. Other Services real GDP grew by –7.53% (year-on-year) in Q3 2020, lower than the growth recorded in the same period of the previous year by –8.56% points, but higher than the growth recorded in Q2 2020 by 7.54% points. Quarter on Quarter growth was –5.79%.

The sector contributed 2.41% to real GDP in Q3 2020 as against the 2.52% reported for the corresponding quarter of 2019 and the 2.87% recorded in Q2 2020.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Advertisement
Advertisement
Advertisement
Advertisement

Facebook