Nigeria’s economic growth slowed to 2.51% in Q2 2023 amid subsidy removal

Nigeria’s economic growth slowed in the second quarter of 2023 as the Gross Domestic Product (GDP) grew by 2.51 per cent year-on-year in real terms within the quarter, the National Bureau of Statistics has said.

The statistics bureau said this in its “Nigerian Gross Domestic Product Report Q2 2023,” released on Friday.

The NBS said this growth rate is lower than the 3.54 per cent recorded in the second quarter of 2022 and may be attributed to the challenging economic conditions within the quarter.

According to the report, the performance of the GDP in the second quarter of 2023 was driven mainly by the services sector, which recorded a growth of 4.42 per cent and contributed 58.42 per cent to the aggregate GDP.

The bureau said the agriculture sector grew by 1.50 per cent, an improvement from the growth of 1.20 per cent recorded in the second quarter of 2022.

The report said the growth of the industry sector was -1.94 per cent relative to -2.30 per cent recorded in the second quarter of 2022.

Regarding share to the GDP, the bureau said agriculture and the industry sectors contributed less to the aggregate GDP in the second quarter of 2023 compared to the second quarter of 2022.

In the quarter under review, it explained that aggregate GDP stood at N52,103,927.13 million in nominal terms.

“This performance is higher when compared to the second quarter of 2022, which recorded aggregate GDP of N45, 004,520.89 million, indicating a year-on-year nominal growth of 15.77 per cent,” it said.

Within the quarter under review, the Nigerian government introduced a set of reforms in its efforts to stabilise the economy, with an attendant effect on economic growth. The government abolished its costly subsidy regime and announced a convergence of the nation’s multiple forex windows, among others.

Oil sector

The bureau noted that the nation in the second quarter of 2023 recorded an average daily oil production of 1.22 million barrels per day (mbpd), lower than the daily average production of 1.43 mbpd recorded in the same quarter of 2022 by 0.22 mbpd and lower than the first quarter of 2023 production volume of 1.51 mbpd by 0.29 mbpd.

It said the real growth of the oil sector was –13.43 per cent (year-on-year) in Q2 2023, indicating a decrease of 1.66 per cent points relative to the rate recorded in the corresponding quarter of 2022 (-11.77%).

The NBS said the growth also decreased by 9.22 per cent points compared to Q1 2023, which was –4.21 per cent.

“On a quarter-on-quarter basis, the oil sector recorded a growth rate of -14.12 per cent in Q2 2023.

“The Oil sector contributed 5.34 per cent to the total real GDP in Q2 2023, down from the figure recorded in the corresponding period of 2022 and down from the preceding quarter, where it contributed 6.33 per cent and 6.21 per cent respectively,” the report said.

Non-oil sector

The non-oil sector grew by 3.58 per cent in real terms during the reference quarter (Q2 2023).

The NBS said this rate was lower by 1.19 per cent points compared to the rate recorded in the same quarter of 2022 and 0.81 per cent points higher than the first quarter of 2023.

“This sector was driven in the second quarter of 2023 mainly by information and communication (telecommunication), financial and insurance (financial institutions); trade, agriculture (crop production); manufacturing (food, beverage & tobacco), construction; and real estate, accounting for positive GDP growth,” the NBS said.

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In real terms, it said the non-oil sector contributed 94.66 per cent to the nation’s GDP in the second quarter of 2023, higher than the share recorded in the second quarter of 2022, which was 93.67 per cent and higher than the first quarter of 2023 recorded as 93.79 per cent.