February 18, 2022

Nigeria’s economy grows 3.4%, strongest since 2014

Nigerian economy

By Babajide Komolafe, Economy Editor

Nigeria recorded an annual Gross Domestic Product, GDP, growth of 3.4 per cent in 2021, representing the first annual growth since the COVID-19 pandemic induced recession of 2020 and the strongest growth in seven years since 2014.

The 3.4 per cent GDP growth represents 5.32 percentage points the 1.92 per cent contraction recorded in 2020, exceeding the World Bank and International Monetary Fund, IMF’s 2021 projections of 2.5 per cent and 2.7 per cent for the country, respectively. 

The strong GDP growth recorded in 2021 was driven by growth in the Non-Oil sector which contributed 92.76 per cent of the GDP, powered by Agriculture, Trade, Information and Communication (Telecommunication), and Financial and Insurance subsectors. 

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However, the Oil Sector contracted for the second year running weighted by a steady decline   in average crude oil production to 1.5 million barrels per day(mbd) in the fourth quarter (Q4’2021) from 2.07mbd in the first quarter of 2020 (Q1’2020)

Disclosing this yesterday, the National Bureau of Statistics,   NBS,   said: “Nigeria’s Gross Domestic Product (GDP) grew by 3.98%(year-on-year) in real terms in the fourth quarter of 2021, showing a sustained positive growth for the fifth quarter since the recession witnessed in 2020 when output contracted by -6.10% and -3.62% in Q2 and Q3 of 2020 under the COVID pandemic.

“The fourth quarter growth indicates a steady economic recovery accounting for annual growth of 3.40% in 2021. The Q4 2021 growth rate was higher than the 0.11% growth rate recorded in Q4 2020 by 3.87% points and lower than 4.03% recorded in Q3 2021 by 0.05% points. 

“Nevertheless, quarter on quarter, real GDP grew at 9.63% in Q4 2021 compared to Q3 2021, reflecting a higher economic activity than the preceding quarter.

In the quarter under review, aggregate GDP stood at N49.28 trillion in nominal terms. This performance is higher when compared to the fourth quarter of 2020 which recorded aggregate GDP of N43.56 trillion, indicating a year-on-year nominal growth rate of 13.11%. 

“The nominal GDP growth rate in Q4 2021 was higher relative to 10.07% growth recorded in the fourth quarter of 2020 but lower compared to 15.41% growth recorded in the preceding quarter. 2021 annual nominal growth stood at 13.92%. For better clarity, the Nigerian economy has been classified broadly into the oil and non-oil sectors.”

Oil Sector contracts 

The nation in the fourth quarter of 2021 recorded an average daily oil production of 1.50 million barrels per day (mbpd), lower than the daily average production of 1.56mbpd recorded in the same quarter of 2020 by 0.06 mbpd and lower than the third quarter 2021 production volume of 1.57mbpd by 0.07mbpd. 

“The Oil sector contributed 5.19% to total real GDP in Q4 2021, down from figures recorded in the corresponding period of 2020 and down compared to the preceding quarter, where it contributed 5.87% and 7.49% respectively. Nevertheless, the sector contributed 7.24% to real GDP in 2021.

Non-Oil Sector

The non-oil sector grew by 4.73% in real terms during the reference quarter (Q4 2021). This rate was higher by 3.05% point compared to the rate recorded same quarter of 2020 and 0.71% point lower than the third quarter of 2021.

“This sector was driven in fourth quarter 2021 mainly by Agriculture (crop production); Trade; Information and Communication (Telecommunication); and Financial and Insurance (Financial Institutions), accounting for positive GDP growth.

In real terms, the Non-Oil sector contributed 94.81% to the nation’s GDP in the fourth quarter of 2021, higher than the share recorded in the fourth quarter of 2020 which was 94.13% and higher than the third quarter of 2021 recorded as 92.51%. The annual contribution in 2021 was 92.76%.”

Vanguard News Nigeria