Nigeria recorded a Gross Domestic Product (GDP) growth of 4.03% (year-on-year) in 2021, exceeding its projected GDP growth rate of 3% for the fiscal year. This modest annual GDP growth came on the back of five consecutive quarters of positive growth, following the country’s brief economic recession in 2020 when the economy contracted by 6.10% and 3.62%, respectively, in the second and third quarters of the year.
Nigeria’s exit from the 2020 economic recession was weak, as the GDP growth rates for Q4 2020 and Q1 2021 were 0.11% and 0.51%, respectively. The country’s economic growth stabilized in the second, third and fourth quarters of 2021, as it recorded positive GDP growth rate of 5.01%, 4.03%, and 3.89, respectively. Admittedly, these growth rates were boosted by the base effect of the economic contractions that Nigeria experienced in 2020 due to the twin shocks of COVID-19 and low crude oil prices. Nonetheless, it is important to note that the country’s overall year-on-year economic growth of 4.03% in 2021 was no mean feat, considering that the effects of the pandemic lingered in 2021, as the Delta and Omicron variants of COVID-19 negatively affected global economic recovery and triggered new restrictions and lockdowns in many countries.
The non-oil sector of the economy grew by 4.4% in 2021, following a contraction of 1.25% in 2020. The Information, Communication and Technology (ICT), Agriculture and Manufacturing sectors of the Nigerian economy grew by 6.55%, 2.13% and 3.35% respectively, in 2021, and served as key drivers for the growth witnessed in the country’s non-oil sector. Notwithstanding the increased demand for crude oil and the surge in oil prices, Nigeria’s oil sector declined by 8.30% in 2021, as it continued to suffer setbacks due to technical and social issues. The country failed to meet its oil production target of 1.86 million barrels per day (mbpd), as average crude oil production declined steadily from 1.72 mbpd in Q1 2021 to 1.50 mbpd in the fourth quarter of the year. This decline in production volumes also had significant budgetary implications, as Nigeria fell short of its oil revenue projection of ₦1.843 trillion (January to November pro-rata) by 47.4%, notwithstanding the 69 percent year-on-year increase in the average price of Bonny Light crude, from US$42.1 per barrel in 2020 to US$71.1 per barrel in 2021.
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