Nigeria Economy | |
Nigeria Economy | |
802 VIEWS | |
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Tuesday, February 12,
2019 02:28 PM / ARM
Research
This morning, the
National Bureau of Statistics released the Q4 2018 GDP numbers. From the
details provided, the Nigerian economy grew by 2.4% YoY compared to Q3 18
growth of 1.8% YoY. Notably, the number was shy of our estimate of 2.7% YoY due
to lower crude oil production of 1.91mbpd – with the oil sector
contracting for the third time this year by 1.6% YoY – compared to our estimate
of 2.01mbpd.
As a result, the growth
picture over Q4 18 largely mirrored further improvement in the non-oil sector
(+2.7% YoY). That said, over full year 2018, the Nigerian economy grew by 1.9%
YoY, higher than the 0.8% growth reported for full year 2017 and 10bps lower
than our estimate of 2.0%
Figure 1: Growth in Real GDP, Oil and
Non-Oil GDP
Source: NBS, ARM Research
Non-Oil Sector Holds
The Fort
Similar to the trend observed in the
last two quarters, non-oil sector remained the focal point for economic
expansion, growing 2.7% YoY in Q4 18 (Q3 18: 2.3% YoY). The numbers revealed
improvement across all the sub-sectors, with Services and Agric leading the
pack. Looking at breakdown of the former, output in the services sector
expanded by 3.8% YoY, stemming from improvement in information and
communications technology (+13.2% YoY) and support from activities in the
transport segment (+9.5% YoY). For clarity, the Nigerian Communications
Communication revealed that active subscribers, our proxy for callable minutes,
improved by 13.2% YoY while internet subscribers increased by 10.7% YoY in the
review quarter. Elsewhere in the Agric space, production activities improved by
2.5% in Q4 18, higher than Q3 18 of 1.9% but slightly disappointing compared to
our estimate of 3% and Q4 average of 3.8% over the last four years.
Furthermore, manufacturing sector
grew by 2.4% YoY due to expansion in food production, oil refining and textile
production. For us, we believe the improvement in food (+2.2% YoY) and textile
(+1.2% YoY) production reflects continued FX availability and stability. Growth
in oil refining however came as a surprise to us, up by 33.6% after posting two
quarters of consecutive contraction. For context, Going by NNPC’s monthly
report, capacity utilization at the country’s refineries still remain low, with
October and November numbers lower than 1%, as they undergo a revamping
exercise. Elsewhere activities in the trade and construction sectors further
strengthened by 1.0% YoY and 2.0% YoY respectively.
To Our Surprise, Oil
Production Falls Again
Output in the oil sector contracted
by 1.6% over Q4 18, to record the third consecutive quarter of negative
performance this year. For context, average crude oil production printed at
1.91mbpd (vs. 1.96mbpd in Q4 17) during the review period, a further decline
from 1.95mbpd reported in Q3 18. Notably, given that recent reports from NNPC
and press releases by international oil companies suggest no leakages at major
pipelines (Trans – forcados and Trans Ramos) over Q4 18, we would seek more
clarity on the source of the lower crude oil production during the period.
Research 234 (1) 2701653 research@armsecurities.com.ng
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