Underwhelming Q2 2023 GDP Growth Recorded
Highlights
- Real GDP in Nigeria rose by 2.51%, year on year in the second quarter of 2023, slightly higher than 2.31% recorded in Q1 2023 and 3.54% in Q2 2022 with industry returning to contraction.
- We are adjusting our 2023 forecast further downwards to 2.65% from 2.85% earlier premised on:
- H1 2023 GDP currently stands at 2.41% and will require an average growth in H2 2023 of 3.30% to record 2.85%.
- Q3 2023 is the quarter where the impact of subsidy removal, FX unification and other reforms of the new administration had it major impact on squeezing household consumption demand and firms' costs of operations as well as reduced private investment.
- Muted government investment in the economy in Q2 & Q3 2023 with new administrations at the Federal and State level settling in Q3 2023.
- Further contraction in oil production in July 2023 and likely to continue for the following 2 months.
- ExpectationofcontinuedrisinginflationinQ32023anditimpactonrealGDPgrowth.
Event
According to the Nigerian National Bureau of Statistics (NBS), Real Gross Domestic product (GDP) in Nigeria rose by 2.51%, year on year in the second quarter of 2023, slightly faster than 2.31% recorded in Q1 2023 and 3.54% in Q2 2022. Growth was driven by the services sector, which grew by 4.42%. The agricultural sector reversed its first Quarter 2023 contraction growing by 1.50% compared to-0.90% in Q1 2023 and 1.20% in Q2 2022.
Industry, which had reversed its seven-quarter long contraction growing by 0.31% in Q1 2023, returned to contraction in Q2 2023 recording -1.94%. Accordingly, the non-oil grew by 3.58% in Q2 2023, compared to 2.77% in Q1 2023 while the oil sector, which has contracted since Q1 2020, further declined by -13.43% in Q2 2023 compared to -4.21% in Q1 2023 and -11.77% in Q2 2022.
