Latest Gross Domestic Product report released on Thursday by the National Bureau of Statistics (NBS) showed that Nigeria’s GDP rose by 0.11% (year-on-year) in the fourth quarter of 2020, which was the first positive quarterly growth in the last three quarters of the year 2020.
A country is said to be in a recession when it records a negative GDP growth rate for two consecutive quarters. With the negative GDP figures of -6.1% and -3.62% recorded in both Q2’2020 and Q3’2020 respectively, the Nigerian economy slipped into a recession largely due to the twin shock of the coronavirus pandemic which brought economic activities to a standstill and the crash in global oil prices.
According to the NBS report, the growth in Q4’2020 of the GDP was majorly driven by the positive growth recorded in the Information and Communication sector (45.9%) and the Agriculture sector (3.42%).
Key Takeaways
- The oil sector declined by 19.76% (year-on-year) in real terms as against the 13.89% contraction recorded in Q3’2020.
- The non-oil sector rose by 1.69% in real terms, which was a significant improvement compared to the 2.51% contraction that was recorded in Q3’2020.
- The non-oil sector contributed 94.13% while the oil sector contributed 5.87% of the total GDP for the fourth quarter of 2020.
- For the oil sector, average daily production of 1.56 million barrels per day (mbpd) was recorded, which was a decline of 6.59% and 22% when compared to the 1.67mbpd and 2mbpd recorded in Q3’2020 and Q4’2019 respectively, caused by the crash in global crude oil prices which was partly as a result of the oil price war between Saudi Arabia and Russia.
- The growth of 1.69% recorded in the non-oil sector was largely driven by the Information and Communication sector. Other drivers to this growth were Agriculture, Real Estate, Manufacturing (Food, Beverage & Tobacco), Mining and Quarrying, and Construction.
With the positive growth in real GDP recorded for the fourth quarter of 2020, it implies that the Nigerian economy has officially exited the recession entered into in Q3’2020 largely triggered by the coronavirus pandemic which affected economic activities for the most of the year. I expect this improvement to serve as a boost to grow the economy even further in subsequent quarters of this year which would also be helped by the rising crude oil prices and the potential arrival of the coronavirus vaccine expected in the country which hopefully would signify the beginning of the end for the pandemic in Africa’s largest economy.