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NBS Publishes GDP by Expenditure for Q1 and Q2 2016

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Friday, November 25, 2016 11:38  AM /NBS

GDP by Expenditure
The Gross Domestic Product (GDP) can be derived as the value of all goods and services available for final uses and export. GDP at market prices includes net taxes on products; this is subtracted to obtain basic price GDP.


The expenditure approach measures the final uses of the produced output as the sum of Final consumption, Gross Capital Formation and Exports less Imports, which are considered in turn in this chapter. Consumption of fixed capital—a measure of depreciation of as-sets—comprises the difference between Gross Domestic Product (GDP) and Net Domestic Product (NDP) and is also considered in this chapter.

Basic price GDP declined by 0.36% in real terms in the first quarter of 2016, and declined by 2.06% in the fourth, considerably lower than the growth rates of 3.96% and 2.35% that were recorded in the same quarters of 2015.

Market price GDP declined even more, by 0.42% in the first quarter and declined 2.22% in the second as a result of slower growth in Net taxes.

Household Final Consumption Expenditure:

This consists of expenditure, including imputed expenditure, incurred by resident households on individu-al consumption goods and services.

General Government Final Consumption Expenditure:

This consists of expenditure, including imputed expenditure, incurred by government at all levels on both individual and collective consumption goods and services. Individual consumption items are those that are provided to individual households, such as education and health services. Collective consumption items relate to goods and services utilised by society as a whole, such as security and infrastructure.

Not for Profit Institutions Serving Households Final Consumption Expenditure

This consists of expenditure, including imputed expenditure, incurred by government at all levels on both individual and collective consumption goods and services. Individual consumption items are those that are provided to individual households, such as education and health services

Gross Fixed Capital Formation

This is measured as the total value of producer’s acquisitions, less disposals, of fixed assets during the ac-counting period, plus certain additions to the value of non-produced assets (such as improvements to natural assets) realised by the productive activity of institutional units.

Change in Inventories

is the consist of changes in; stocks of outputs that are still held by units that produced them prior to their being further processed , sold, delivered to other units or used in other ways, measure by the value of the entries into inventories less the value of withdrawals and the value of any recurrent losses of goods held in inventories.

Exports of Goods and Services

Consists of sales of goods and services to residents abroad, to residents within Nigeria

Imports of Goods and Services

Consists of sales of goods and services from residents abroad, to residents within Nigeria

Consumption of Fixed Capital

This represents the reduction in value of the fixed assets used in production during the period, that results from physical deterioration, normal obsolescence or normal accidental damage.


GDP expenditure - Household Final Consumption
In the first two quarters of 2016, household consumption fell year on year in real terms, by 1.05% in the first quarter, and by 6.00% in the second. This reflects the difficulties that consumers have faced in recent quarters, with rising unemployment, and high inflation erod-ing purchasing power.

In the same quarters, unemployment rose to 12.1% and 13.3%, compared to 7.5% and 8.2% in the first and second quarters of 2015. However, the higher prices resulted in year on year growth in nominal consumption remaining positive.

This component accounted for 58.11% of real GDP in the first quar-ter of 2016, and 58.55% in the second terms, slightly lower than the in the same periods in 2015, given that in each quarter year on year growth was lower than that of the overall economy.  

Not-for-Profit-Institutions-Serving-Households (NPISH)
This expenditure component recorded the highest real year on year growth rate in the first quarter of 2016, at 5.27%, and the only component apart from exports to record positive growth. However, this was followed by the lowest growth rate recorded among ex-penditure components in the second quarter. However, this com-ponent accounted for only 0.37% of GDP in the first half of 2016.

General Government
General government expenditure is primarily on collective ex-penditure items; this subcomponent accounted for 68.45% of gov-ernment expenditure in the second quarter of 2016, although this proportion was smaller in the first quarter at 59.00%.

However, since the final quarter of 2014, the year on year real growth rate of individual consumption expenditure has tended to be higher. This was the case in the first half of 2016: in the first quarter growth in individual consumption expenditure was –9.28% com-pared to –29.75% for collective, and in the second quarter the growth rates were 22.77% and 0.02% respectively.

Other than trade, collective and individual government con-sumption expenditure have been the most volatile compo-nents of GDP since 2011 (as measured by standard deviation in growth rates).



GDP Expenditure - Gross Capital Accumulation

Gross Fixed Capital Formation (GFCF)
In the first quarter, GFCF recorded a year on year decline of 7.23% in real terms, the fourth consecutive decline in the revised figures. However, in spite of the recession, GFCF grew by 3.09% in the sec-ond quarter in real terms. Investment accounted for 16.69% of GDP in the first half of 2016

Growth in GFCF is driven predominantly by construction of build-ings, which accounted for 73.21% of real GFCF in the first half of 2016, and declined by 5.37% in the first quarter and 6.28% in the second, relative to the previous year. However in the second quar-ter this was outweighed by growth rates of 87.42%, and 91.62% for Transport Equipment, and Machinery, respectively.

Changes in inventories
Changes in inventories, often regarded as a sign of economic con-fidence (as firms stock up on products if they anticipate higher fu-ture demand) recorded year on year declines in each quarter since the start of 2015, in both real and nominal terms. In real terms, these declines were 6.88%, and 7.77% in the first and second quar-ters in 2016 respectively.  

Consumption of Fixed Capital
Consumption of fixed capital (defined in chapter 3) is a measure of depreciation of assets, and is not part of GDP but represents the difference between gross domestic product (GDP) and net do-mestic product (NDP). Consumption of fixed capital declined by 0.51% in real terms, between the first quarters of 2015 and 2016.

In the second quarter, the year on year decline was 3.45%. In both cases, the growth rates were lower than that of market price GDP, and as a result, NDP recorded smaller year on year declines. In the first quarter of 2016, NDP fell by 0.41% year on year, and in the second quarter it fell by 2.14%. This compares to declines of 0.42% and 2.22% for market price GDP.

As a percentage of GFCF, consumption of fixed capital fell in both the first and second quarter of 2016, to 33.20% in the first quarter, and then to 32.21% in the second. This is lower than the average of each year since 2011. This implies that the amount of investment necessary in order to maintain the existing stock of capital was less than in the earlier periods.



GDP Expenditure - Trade

Exports of Goods and Services

The value of exports and goods and services is greatly affected by the price of oil, given that a large percentage of the total value of exports consists of crude oil. However, given that Nigeria faces international dollar prices for oil (among other commodities) the value of the Naira also has a large impact.

Although in the first quarter of 2016 the value of exports continued to decline, this trend was reversed in the second quarter, partly due to a large depreciation of the Naira. However, the quarterly increase in value of 38.13% was not enough to outweigh previous declines, and the year on year growth rate was –11.06%. The volume of exports increased year on year, in both periods.  

Imports of Goods and Services
After remaining stable in the first quarter of 2016 (recording a neg-ative quarterly growth rate of –0.67%) the value of imports recorded a large increase in the second quarter, of 38.13%.

Much of this was attributable to an increase in imports of “Boilers, Machinery and Appliances”. This growth rate was enough to counter previous falls in the value of imports, leading to a year on year growth rate of 23.42%. The volume of imports followed a similar pattern  

Net Balance of Trade
The balance of trade remained negative in the first half of 2016, after becoming so in 2015 for the first time in the rebased period. The deficit widened considerably in the first quarter of 2016, to N 441.55 billion, mainly as a result of the fall in exports. In the second quarter the deficit widened again to 476.13 billion, as even though the quarterly increase in exports was larger than that of imports in percentage terms, is was smaller in absolute value.



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