Wednesday, February 28,
2018 / 08:48 AM / FBNQuest Research
The
national accounts for Q4 2017 show an acceleration in growth from 1.4% y/y in
the previous quarter to 1.9%. Our expectation, shared with the wire services,
was GDP growth of 2.1% y/y.
The
acceleration was in part a reflection on improved stability in the Niger Delta
since the oil economy expanded by 8.4% y/y, and therefore on the political
leadership for responding to local sensitivities.
It
was also driven by an improvement in the non-oil economy, which expanded by
1.5% y/y following the previous quarter’s -0.8%. The data is not seasonally
adjusted.
The NBS notes in its commentary that oil
production averaged 1.91 mbpd in Q4 2017, compared with 2.03 mbpd the previous
quarter and 1.76 mbpd in the comparable year-earlier period. We are seeing therefore
a diplomatic dividend on a y/y basis.
Oil’s share of real GDP amounted to just
7.2% in Q4 2017, which makes it the fifth largest sector in the economy after
agriculture, trade, information and communications, and manufacturing. Through
its linkages across other sectors, however, the indirect oil economy may be as
large as 40% of GDP.
In the non-oil economy, the decent y/y
growth posted by transportation and storage (double-digit) and construction may
indicate some reward for the FGN for its infrastructure spending. Sectors
more responsive to consumer spending (such as information and communications)
disappointed.
Turning to the Q1 2018 data, we again see
positive base effects for the oil economy. Output averaged 1.69 mbpd in Q1 2017
and is currently running at +/- 2.0 mbpd. The non-oil economy is generally soft
in the first quarter as households recover from seasonal festivities. We are
looking for GDP growth of 2.6% y/y in the current quarter.
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