Q2 2019 GDP: Oily Exit From Recession and Services Fuels Growth


Tuesday, September 03, 2019    / 12:12PM / by ARM Research  / Header Image Credit: NBS


Data released by NBS revealed the Nigerian economy expanded by 1.94% for the second quarter of 2019, deviating from our estimate of 2%. A slowdown from the revised Q119 GDP of 2.1% (previously: 2.01% due to a revision in oil output). Improved activities in the services, Agric and Oil sectors spearheaded the growth picture this quarter, while  trade and Manufacturing sectors contracted.Overall the Non-oil sector expanded by 1.6% YoY, while oil sector expanded by 5.2% YoY. 

To begin, the services sector expanded 2.9% YoY, a reflection of improved activities in telecommunications sector (ICT). Clearly, subscriber growth observed from both the data users (29.5% YoY) and voice calls ( 7.3% YoY) fueled the momentum with total subscribers at the end of Q2 19 printing at 173.8 million. Elsewhere, the exit of the real estate sector from recession was short lived as the sector contracted by 3.8% YoY.  On other front, the oil sector exited recession this quarter, expanding by 5.2% YoY, a fallout of improved production and low base in the prior year. That said, crude production printed at 1.98mbpd (Q2 18: 1.84mbpd) augmented by additional production from the Egina Oil field which resumed operations this year. This is further evidenced by an upward revision to Q1 crude production numbers to 1.99mbd (previously: 1.94mbpd). 

Dishearteningly, the Agric sector only grew by 1.8% - a moderation from 3.2% reported in Q1 19 reflecting a slowdown in crop production. For us, we believe this stemmed from disruptions to farming activities in April and May by armed bandits in the North which invariably led to shortage of crops and increased food prices in both months as evidenced in inflation numbers. Nonetheless, recent updates from these regions shows there's been improvement in recent months. On the flipside, Manufacturing sector contracted by 0.1% YoY mirroring a slowdown in cement, food and textiles production.


Figure 1: Trend in the real sector growth (YoY)

Proshare Nigeria Pvt. Ltd.

Source: NBS, ARM Research

For us, while the growth numbers was not surprising, we believe it would only support CBN's  posture on fuelling economic growth this year. Nonetheless, we see no room for a cut in MPR over the rest of the year buoyed by looming currency concerns. We believe the focus would be on the use of  unorthodox methods to spur growth. Regardless, we retain our growth forecast of 2.2% for FY 19 with support from both oil and non-oil sectors.



Proshare Nigeria Pvt. Ltd.

Research 234 (1) 2701653  research@armsecurities.com.ng


Proshare Nigeria Pvt. Ltd.

Related News

    1. Nigeria's GDP Grew By 1.94% YoY In Real Terms In Q2 2019 - NBS
    2. Manufacturing PMI Stands at 57.9% in August 2019 from 57.6% in July 2019
    3. NESG Dialogue: Stakeholders Call For Competitive Agric Seeds Industry in Nigeria
    4. Agenda For The New Federal Cabinet - FSDH
    5. Setting The Pace For The Next 4 Years
    6. Is Nigeria Immune To The Next Global Slowdown?
    7. PMB Second Term Cabinet: Experts, Analysts Set Targets For Finance Minister
    8. Strength From Abroad: The Economic Power of Nigerians In Diaspora
    9. Nigeria: Inflation Lower But The Storms Are Gathering - Food Import Restriction Yet To Bite
    10. ERGP: Economists Call For a Long-Term Economic Framework
    11. NESG Visits Proshare, Solicits Strategic Media Collaboration Ahead of NES25
    12. Why Nigeria Needs To Unlock Economic Liquidity - Wale Edun
    13. Weekly Economic and Financial Commentary - WE 09 August 2019
    14. Global Uncertainty - Is This The New Economic Order?– LBS Executive Breakfast Session - August 2019
    15. Headline Inflation To Drop To A 42-Month Low Of 10.98% In July - FDC
    16. The Pentad - Urban Retail Price Tracker - August 2019


    Proshare Nigeria Pvt. Ltd.

    Proshare Nigeria Pvt. Ltd.

    Related News