The NBS has released the national accounts for Q1 2017 to show negative growth of -0.5% y/y (after -1.7% the previous quarter). The economy has now contracted for five successive quarters on a y/y basis. Our expectation was modest GDP growth of 0.2% y/y in Q1 on the basis of some recovery in the non-oil economy. That recovery did materialise but our forecast was undone by further contraction in the oil economy (of -11.6% y/y). The NBS has revised downwards its data for oil output, and therefore oil GDP and total GDP for the four quarters of 2016.
Oil’s share of real GDP amounted to just 8.9% in Q1 2017 and is now only the fifth largest in the economy: it is topped in descending order by 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.
The non-oil economy expanded by 0.7% y/y in Q1. A weakness in the data is that the output of the trade segment declined q/q, which was not a surprise in view of seasonal factors, but also y/y.
In search of evidence of the fiscal stimulus, we note steady q/q growth in both construction and road transport.
Sources: National Bureau of Statistics (NBS); FBNQuest Research
Looking ahead to the Q2 2017 data, we see growth of 1.6% y/y and a belated exit from the recession. We expect non-oil growth of 1.0% y/y, along with a rebound in the oil economy. The revised NBS figures show crude oil output as low as 1.61 mbpd in Q2 2016.
Looking further ahead, a step-up to real growth on a per head basis requires a continuing fiscal stimulus, rising household consumption and a further decline in sabotage in the Niger Delta.
