The national accounts for Q1 2018 are disappointing even after we make allowances for the adjustments to oil GDP (and therefore total GDP) for Q3 and Q4 2017. The economy grew by 2.0% y/y, compared with an upwardly revised 2.1% the previous quarter, the oil sector by 14.8% and the non-oil economy by 0.8%: our expectations were 2.6% y/y, 20.0% and 1.0% respectively. The greater disappointment was the non-oil figure. We continue to comment on the broad aggregate trends on a y/y basis because the data are not seasonally adjusted.
- Oil’s formal share of real GDP amounted to just 9.6% in Q1 2018, which makes it the fourth largest sector in the economy after agriculture, trade and manufacturing. Through its linkages across other sectors, however, the indirect oil economy may be as large as 40%-50% of GDP, which helps to explain Nigeria’s recession for five quarters through to Q1 2017.
- In the non-oil economy, the growth rates for the larger sectors were generally better than in the year-earlier period, the notable exceptions being construction, real estate, and information and communications.
- Trade is probably the best barometer for economic activity across the country. It did better but nonetheless contracted by -2.6% y/y.
- The revisions have not changed the 0.8% y/y growth number for 2017.
Sources: National Bureau of Statistics (NBS); FBNQuest Research
· Turning to the Q2 2018 data, we anticipate a modest boost for the oil economy on base effects. Crude output for Q2 2017 has not been revised this time and averaged 1.87 mbpd. It is currently running at +/- 2.0 mbpd, according to a recent NNPC statement. We are looking for a slightly better performance from the non-oil economy and GDP growth of 1.7% y/y for the current quarter.
