Q1 2021 National Accounts: Green Shoots in Short Supply

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 Wednesday, June 02, 2021 09:27 AM / by FBNQuest Research/ Header Image Credit:  Bemsiq

 

The release of the national accounts for Q1 '21 brings us to the quarterly search for the green shoots of recovery. As previously, we do not cover sectors accounting for less than 1% of GDP and we produce a chart with the data for four quarters (because the accounts are not seasonally adjusted). Just one sector (information and communications) qualifies as showing robust growth throughout the COVID-19 experience. This is true of many other economies during lockdown and other restrictions. There is an important distinction, however: governments in advanced, wealthier economies have the resources to cushion the blow for households far more than has been possible for the FGN, and those same households have accumulated sizeable savings that should fuel the recovery post-COVID in developed economies.

 

We see from the chart that growth in info and comms slowed sharply in Q1 '21, while still a respectable 6.3% y/y.  This could reflect the temporary halt to the sale of new SIM cards by the regulator and the subsequent requirement that new sales must be linked to a new national identification number (NIN).

 

The regulator is guided by the FGN's legitimate security considerations, and we have seen the same in other markets. We do not expect any lasting damage to the industry as a result.

 

The recovery of manufacturing in the chart is consistent with the above-neutral readings in our PMI over the period. All leading segments contracted y/y during lockdown, which roughly coincided with Q2 '20. The third largest (cement) has since staged an impressive turnaround, posting double-digit growth (11.2% y/y) in Q1 '21. The main inputs are available locally and the three leading operators have all raised their production capacity.

 

The largest segment of manufacturing (food, beverages and tobacco) has also responded well to the lifting of restrictions with 7.1% y/y growth in Q1.

 

Agriculture continued its underwhelming growth. The substantial credit interventions by the CBN and state-owned development banks are perhaps being negated by the rapid spread of insecurity across the country.

 

The NBS is to release a rebased set of national accounts either in 2022 or early the following year, depending on available resources. The first step is a survey of new businesses, which tends to be dominated for obvious reasons by firms operating in newish and expanding sectors (such as information & comms).


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Top-performing sectors (% chg; y/y)

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 Sources: National Bureau of Statistics (NBS); FBNQuest Capital Research


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