Wednesday, August 29, 2018 7.00PM / Proshare WebTV
In the recent Proshare WebTV Economy discourse , Tope Babalola of the Economy desk shared his perspective on the 1.50% Q2, 2018 Nigeria GDP report and the implications of what has been a “slow growth” momentum.
Babalola noted that despite the fact that the Nigerian economy was not in a recession, there was a deceleration in output, looking at the Q4, 2017 (2%), Q1, 2018 (1.95%) and the current growth rate of Q2, 2018 (1.5%) .
He identified three issues from the Q2, 2018 Nigeria GDP report published by the National Bureau of Statistics on Monday August 27, 2018;
1.Nigeria was experiencing a negative output gap, considering the reality that it has been going far below its output capacity and that means there is a lot of capacity which is idle.
2.Nigeria was growing at 1.5% which is below its population growth and affects per capital income
3.Nigeria growth at 1.5% constitutes a drag on the Sub-saharan Africa economy, considering its position as a major economy in the region.
The Analyst stressed that the non oil-sector grew from 0.74 to 2.56% while oil sector production fell from 14% to -3%.
the oil produce per day fell from 2million to 1.84million and also in taking to consideration the price of oil end of the Q2 was also flip flopping compare to what it was in Q1.
Speaking on the sectoral performance, he observed that the ICT(11%) and Construction (7.9%) while sectors like manufacturing slowed at 0.66%, which in most economics is the driver of growth because of its link to jobs.
Tope was concerned about the slow growth of the agric sector at 1.19%, which constitutes a fifth of the whole economy. He also noted that there was rebalancing with the non-oil-sector comprising 90.91% of the economy, while that of the oil sector was 8.87%.
According to him the oil sector there was a deterioration in the output, while production fell from 2mbpd in Q1, 2018 to 1.84mbpd in Q2, 2018 alongside the volatility in crude oil price.
He called on the fiscal policy makers to be proactive in terms of its programmes, projects, and plans that ensures a strong level of investments into the economy.
Looking at the oil sector he called for a stabilized policy, considering its role as the major foreign exchange earner for the country.
For the monetary policy environment Babalola shared that it was restricted and with the reserves falling, had to be cautious, while fiscal policy needs to come up to speed in to unlock the structural gridlock.