GDP Q2 2021: Real Growth Performance Masked by Base Effects


 Monday, August 30, 2021 / 10:05 AM / by FBNQuest Research / Header Image Credit: FAVPNG


The chart below highlights some of the best performing sectors of the economy as disclosed in the latest national accounts for Q2 '21. As we have done previously, we exclude those that represent less than 1% of constant price GDP and remind our readers that the data series is not seasonally adjusted. We see from the data that two sectors, namely trade, and transportation and storage posted robust double-digit growth during the quarter. However, the increased output for both sectors reflects favorable base effects from the prior year quarter as a result of the federal government's containment measures, which are identical to those imposed by most governments across the world.


After eight consecutive quarters of contraction, the trade sector grew by 22.5% y/y. We recall that in Q2 '20 trade and many other commercial activities prractically ground to a halt following government's imposition of mobility restrictions aimed at curtailing the spread of the COVID-19 virus.

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Nigeria, like many other countries, suffered the consequences of the partial closure of the transportation sector, which disrupted global supply chains. The sector expanded by 76.8% in Q2 '21, compared with -49.2% in Q2 '20 at the peak of the pandemic, thanks to a nearly full reopening of the economy.


The manufacturing sector maintained its recovery from the previous quarter, with a growth of 3.5% y/y. The sector's expansion was fueled by single-digit y/y growth across all its segments, with the exception of oil refining, which has historically been in decline.


Notably, output growth for textiles and apparel, the third largest segment within manufacturing, recovered to 1.8% in Q2, from a contraction of -4.5% in Q1.


Growth for information and communications decelerated to 5.5%. The growth rate, which is its second successive quarter of single-digit growth, reflects subscriber churn (of c.9 million y/y) following the regulator's temporary halt on new SIM card sales which was lifted during Q2 '21, and a requirement that new sales be linked to a new national identity number.


Broadly speaking, Q2 '21 GDP growth was flattered by weak comparables in the previous year's quarter. As a result, we believe that quarter-to-quarter comparisons provide a more telling picture. We note  that most sectors (excluding trade, information and communication, and agriculture) declined q/q, while overall GDP contracted by -0.8% q/q.

Top performing sectors (% chg; y/y)

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Source: National Bureau of Statistics (NBS), FBNQuest Capital Research

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