The National Bureau of Statistics (NBS) in its latest report on the country’s overall economic performance has again noted that Nigeria’s Gross Domestic Product (GDP) further contracted by a negative 1.3 per cent in the fourth quarter of 2016.
According to the report released by NBS yesterday, for the full year 2016, GDP contracted by -1.51 per cent, indicating real GDP of N67,984.20 billion for the year, the worst in more than 30 years.
The NBS in the report explained that in real terms, the economy recorded a decline of N240.8 billion from N18.53 trillion in the fourth quarter of 2015 to N18.29 trillion in the fourth quarter of 2016.
According to the bureau, this decline of -1.3 per cent was less severe when compared with the negative decline of -2.24 per cent recorded in the third quarter of last year, but was nevertheless lower than the growth rate recorded in the final quarter of 2015.
A review of the report shows that nominal GDP was N29,292,998.54 million at basic prices in the fourth quarter of 2016, which represents year-on-year nominal growth of 12.97 per cent. When compared with real growth, this is 5.84 per cent points higher than the rate recorded in the same quarter of 2015, implying that the GDP deflator increased faster than the earlier period.
The NBS further noted that the quarter-on-quarter, real GDP increased by 4.09 per cent, which partly reflects seasonal factors as well as a rise in the general price level while for the full year 2016, aggregate nominal GDP stood at N101,598,482.13 compared to N94,144,960.45.
This contraction, according to NBS, reflects a difficult year for Nigeria, which included weaker inflation induced consumption demand, an increase in pipeline vandalism, significantly reduced foreign reserves and a concomitantly weaker currency, and problems in the energy sector such as fuel shortages and lower electricity generation.
Meanwhile, the Presidency has stated that the recently released 2016 overall and last quarter Gross Domestic Product (GDP) reports show that the Federal Government’s efforts are already bringing Nigeria out of recession.
According to the Presidency, the full year report as released by the National Bureau of Statistics (NBS) reveal that the economy grew by -1.51 per cent. The Presidential Adviser on Economic Matters, Dr. Adeyemi Dipeolu, in a statement said the figures released by the NBS yesterday showed a contraction of -1.30 per cent in the fourth quarter of 2016, translating into an estimated economic growth rate of -1.51 per cent for the full year.
According to him, the Nigerian economy actually performed better overall in 2016 as the growth rate was higher with a contraction at -1.5 per cent than the -1.8 per cent predicted by the International Monetary Fund (IMF), raising hopes that the recession may have bottomed out with improving trends in several key sectors of the economy, including agriculture and mining.
Dipeolu added that the present administration was hopeful that with the ongoing series of engagement with the oil-producing communities of the Niger Delta, the increased oil production output would be sustained.
The Economic Adviser added that the ongoing implementation of the Social Investment Programmes (SIP), the significant infrastructural spending of the Federal Government, and a possible early legislative passage of the 2017 budget are all expected to spur a positive multiplier effect on the Nigerian economy.
Dipolu said, “the recently released data from the NBS showed that the GDP contracted by -1.30 per cent in the fourth quarter of 2016. This translated into an estimated growth rate of -1.51 per cent for the full year 2016.
These figures reflect the slow-down in the economy for most of 2016 but also show that the recession may have bottomed out because of an improving trend in several key sectors.
“Although the oil sector declined by -12.38 per cent on a year-on-year basis, this was a relative improvement compared to the third quarter when the decline amounted to -22.01 per cent. This outcome was due mainly to increases in production such that the quarter-on-quarter growth for the oil sector between the third and fourth quarters was 8.07 per cent. The non-oil sector, however, declined by 0.33 per cent after showing some resilience in the third quarter when it grew by 0.03 per cent at the height of the recession.
“Agriculture grew at 4.03 per cent in the fourth quarter of 2016, which was a marginal decrease from the 4.54 per cent growth in the third quarter. This is mainly because agriculture (especially crop production, which accounts for the bulk of agricultural production) is highly seasonal, with growth in the third quarter of the year usually higher than the others. Nevertheless, the overall outcome for the year was that the agricultural sector grew by 4.11 per cent for the whole of 2016, which was higher than the figure of 3.72 per cent for 2015.
“The manufacturing sector actually grew on a quarter-on-quarter basis by 1.89 per cent but declined over the year by 4.32 per cent reflecting the problems that the sector faced in the course of the year due to a combination of factors including the depreciation in the exchange rate and higher energy costs. The metal ores sub-sector grew by 7.03 per cent in Q4 of 2016 as compared to 6.93 per cent in the last quarter of 2015, thus justifying the priority that the Federal Government continues to give to solid minerals.
“The services sector, which accounted for 53.55 per cent of GDP in 2016, experienced a decline in growth by -0.82 per net over the year as compared to a growth of 4.78 per cent in 2015. This slowdown in the services sector arose from generally fragile economic conditions. This is because its fortunes depend, to a large extent, on consumer spending and government expenditure, which were both adversely affected by difficult economic conditions.
“Nevertheless, the SIP of the Federal Government and the relatively high level of infrastructural spending in late 2016 as well as 2017 capital spending plans should begin to have a multiplier effect on the economy.
“The trend in nearly all the sectors showed a growth improvement in nominal terms although such effects were outweighed by inflationary factors. The expectation is that this trend and the slowing down of month-on-month inflation will enable an early return to positive growth in the economy. This positive trajectory will also receive a boost from the positive news emerging from other parts of the economy.