The oil sector slowed the nation’s real Gross Domestic Product (GDP) to 1.50 per cent in the second quarter of 2018 from 1.95 per cent recorded in the first quarter of the year.
Analysis of the latest GDP report released yesterday by the National Bureau of Statistics (NBS) showed that the economy shrank by 0.45 per cent in the second quarter of the year.
Recently, the Statistician General of the Federation, Dr. Yemi Kale, said though the economy was out of recession, it was still on the path of recovery.
However, the latest report is an indication that the economic recovery may take more time.
Analysis showed that GDP growth within the period was constrained by oil GDP with crude oil and gas production contracting by -3.95 per cent compared to 14.77 per cent in the first quarter of 2018 and 3.53 per cent in second quarter of 2017.
For the first time since the exit from recession, growth was driven by the non-oil sector in the second quarter of 2018.
The report showed that the non-oil sector GDP grew by 2.05 per cent in the second quarter of 2018, up from 0.76 in the first quarter of 2018, representing the strongest growth in non-oil GDP since the fourth quarter of 2015.
Reacting to the report, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, said the contraction in the crude oil and gas sectors was attributable to some production issues which were being addressed by the NNPC.
Udoma, in a statement yesterday, said average crude oil production was only 1.84 million barrels a day in the second quarter of 2018 as opposed to an average production of 2 million barrels a day in the first quarter of 2018.
The minister said the growth in the non-oil sector in the second quarter can be attributed to the implementation of the Economic Recovery and Growth Plan (ERGP).
Non-oil GDP growth was -0.18 per cent in the first quarter of 2016, -0.38 per cent in the second quarter of 2016, 0.03 per cent in the third quarter 2016 and -0.33 per cent in the fourth quarter 2016.
The non-oil GDP was 0.72 per cent in first quarter of 2017, 0.45 per cent in the second quarter of 2017, -0.76 per cent in the third quarter of 2017, 1.45 per cent in the fourth quarter of 2017 and 0.76 per cent in first quarter of 2018.
Further breakdown showed that the non-oil growth was driven by transportation which grew by 21.76 per cent supported by growth in construction which grew by 7.66 per cent and electricity which grew by 7.59 per cent.
Other non-oil sectors that drove growth in Q2 2018 include telecommunication which grew by 11.51 per cent, water supply and sewage which grew by 11.98 per cent and broadcasting which grew by 21.92 per cent.
The report also showed that the non-oil sector performance was, however, constrained by agriculture that grew by 1.3 per cent compared to 3.00 per cent in first quarter of 2018 and 3.01 per cent in second quarter of 2017.
The services GDP recorded its best performance in 9 quarters, growing by 2.12 per cent in the second quarter of 2018 compared to -0.47 in the first quarter of 2018 and -0.85 per cent in second quarter of 2017.
An expert, Mr. Abiola Rasaq, told Daily Trust that the slower recovery of the economy in the second quarter is reflective of the vulnerability of Nigeria to crude oil output and price.
Rasaq, who is the Head of Investor Relations at United Bank for Africa, said whilst oil price remained strong in the second quarter of 2018, output was lower at 1.84mbpd, compared to 2mbpd in the first quarter.
“This lower oil output was due to the shut-ins in two major fields during the period,” he said.
He explained that the sector GDP numbers show stronger recovery in the telecommunication, construction and transport sectors of the economy, even as growth remains elusive in the financial services and trade sectors, which seemed to require fiscal and monetary policy push to gain momentum.
He said financial services and trade were critical to the recovery of the Nigerian economy and the government needed to provide further incentives to enhance growth in the two sectors.
“Interestingly, the growth of financial services will further stimulate growth in the manufacturing and trade sectors, given the multiple effects of financial inclusion and credit access,” he added.
Also speaking to Daily Trust on the development, the Head of Department of Economics at the University of Abuja, Sarah Anyanwu, said early kick off of political activities in the second quarter of 2018 also contributed to the contraction in the GDP in the quarter.
Professor Anyanwu said there is more emphasis on politics than the economy and as such, the economy began to slow in the 2nd quarter.
She said the Federal Government needed to increase productivity, prioritise the economy, create more jobs, increase spending and grow agriculture to catapult the economy.
