Non-oil Sector Growth Evidence of Nigeria’s Economic Recovery

About 2.05 per cent growth recorded in the non-oil sector in the second quarter of the year is evidence the Economic Recovery and Growth Plan (ERGP) implementation is yielding positive results, the Minister of Budget and National Planning, Udo Udoma has said.

On Monday, the National Bureau of Statistics (NBS) published the latest gross domestic product (GDP) growth data, which showed the non-oil sector performance was the strongest growth since the fourth quarter of 2015.

The Minister stated this in a reaction to the latest GDP figures sent to PREMIUM TIMES by his spokesperson, Akpandem James.

The NBS Report indicated the non-oil sector growth was driven by the three priority areas identified under the ERGP.

They included transportation (road, rail water and air), which grew by 21.76 per cent, followed by construction (7.66 per cent) and electricity (7.59 per cent).

Other non-oil sectors that drove growth in the second quarter include telecommunications (11.51 per cent), water supply and sewage (11.98 per cent) and broadcasting (21.92 per cent).

The Minister however expressed regrets that the slight drop in real GDP growth rate for the period was principally as a result of the contraction in the oil sector, which accounts for more than 70 per cent of the country’s foreign exchange earnings.

The contraction in the oil and gas sector stood at about -3.95 per cent, compared to about 14.77 per cent recorded in the first quarter and 3.53 per cent in the corresponding period in 2017.

“I am happy to see that the Nigerian economy has continued to register positive growth in the first and second quarters of the year in spite of the security and other challenges faced by the country,” Mr Udoma said.

Reiterating the focus of the ERGP on diversifying the economy away from dependence on the oil and gas sector, the minister said he was encouraged that government efforts were yielding fruits by the continuing growth in the non-oil sector.

He attributed the contraction in the oil and gas sector to some production issues which are being addressed by the Nigerian National Petroleum Corporation (NNPC).

For instance, average crude oil production was only 1.84 million barrels a day during the period, as opposed to an average production of 2 million barrels a day in the first quarter.

Regardless, he said he remained optimistic that once the issues were addressed, the country should be able to, once more, achieve positive growth in the oil and gas sector.

Also, the minister said government was concerned with the slightly weaker growth recorded in the agriculture sector, which slowed to 1.19 per cent during the second quarter, compared to about 3.0 per cent in the previous quarter.

He blamed the situation partly on security challenges mainly in the North-east and North-central zones.

These security challenges, he noted, affected activities of farmers with the resultant impact on commodity output.

However, he was confident the various measures adopted by government to tackle the situation was already reducing incidents of violent conflicts and other disruptions to farming activities across the country.

He said he expects to see a rebound in growth in the agriculture sector in subsequent quarters.

The other sector that maintained a continued positive growth rate, the minister noted, was industry as a result of the performance of manufacturing and solid minerals, which grew by 0.68 per cent and 5.24 per cent respectively in the second quarter.

The Services sector recorded its best GDP performance in nine quarters, growing by 2.12 per cent, compared to a contraction of -0.47 per cent in the first quarter of the year and -0.85% in second quarter of 2017.

The NBS report showed headline inflation has consistently declined from 18.72 per cent in January 2017 to 11.14 per cent in July 2018, amid significant capital inflows to the economy.

He noted the consecutive disinflation year-on-year, the 18th in succession, resulted in the lowest rate of inflation since June 2016.

“The total value of capital importation into Nigeria stood at $ 5.5 billion in the second quarter of 2018, representing a 207.62 per cent increase compared to the second quarter of 2017.”

While capital importation declined slightly in the second quarter, the total for the first half of 2018 was about $11.8billion, representing the highest half year capital importation since 2014.

He said this was “an indication of increasing confidence in the Nigerian economy by investors”.

 

Source: premiumtimes