Output recorded 6.28% y/y growth in 2Q12. According to Nigeria’s National Bureau of Statistics (NBS), gross domestic product grew at a rate of 6.28 percent in the second quarter of 2012, down by 133 bps from  7.61 percent recorded in the corresponding quarter of the previous fiscal year. We however note that the growth in 2Q output outstrips that of 1Q12 of 6.17 percent (fig. 1). Meanwhile, 2Q nominal GDP is estimated at N9.84 trillion (c.US$62bn) against N9.17 billion (c.US$58bn) recorded during the corresponding quarter of 2011. The growth recorded is on the back of the performance of the non-oil sector. The performance of the non-oil sector was driven by growth in activities recorded in the building & construction sector, while oil sector output decreased.

Nigeria’s economy shows some degree of resilience even as the Euro zone crisis persists. Based on available global economic data with reference to growth recorded in the second quarter of 2012, we note that 32 countries out of 55 posted lower growth rates in the second quarter compared to growth recorded in the first quarter of 2012 (fig. 2). The reason for the deceleration observed in the global output growth can be traced to the further deterioration of the crisis in the Euro zone as -0.50 per cent output growth was recorded in the second quarter down from the -0.10 per cent posted in the first quarter of the fiscal year.  In view of the aforementioned, we state that Nigeria’s 2Q12 growth rate is relatively favourable compared t the downturn observed in most countries. We also highlight that Nigeria ranks sixth of the ten fastest growing economies led by Mozambique (8.00%) based on available global economic data (fig. 3). Regardless, we are of the opinion that Nigeria's output should be growing at double-digit rates given its resources and the size of the market. 

However, downside risk remains...We are persuaded to note that significant downside risks remain despite the growth prospects as seemingly stable economies face the risk of unexpected reversals should the crisis further deepen. Against this backdrop we state that Nigeria should seek to pursue complementary fiscal and monetary policies, that will further strengthen output growth, to serve as a cushioning effect against domestic and external shocks.
 

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