The national accounts for Q4 2018 show that GDP growth picked up to 2.4% y/y, compared with 1.8% recorded in the previous quarter. Our expectation of 2.8% y/y was undone by the -1.6% y/y contraction of the oil economy. The NBS put average crude output in Q4 at 1.91mbpd, compared with 1.95mbpd for the year-earlier period. Non-oil GDP growth accelerated to 2.7% y/y, and is inching towards expansion in per head terms. We 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 7.1% in Q4 2018, which makes it the fifth largest sector in the economy after agriculture, trade, information and communications, and manufacturing. However, through its linkages across other sectors, the indirect oil economy may be as large as 40% of GDP.
- Non-oil growth y/y was the highest since the 3.1% achieved in Q4 2015. Spending in the holiday season will clearly have helped.
- We see little acceleration beyond the slow recovery in household budgets. The increase in the national minimum wage, whenever it is implemented (Q2?), will underpin the process. It is difficult to be specific, given the dearth of consumption indicators and the lag in the national accounts on an expenditure basis: Q1 and Q2 2018 data are due later this month.
Real GDP, oil and non-oil growth (% chg; y/y)
Sources: CBN; FBNQuest Capital Research
- The growth rates of 5%+ y/y achieved through to end-2014, driven largely by high oil prices and a drawdown of +/- US$20bn from the excess crude account, seem distant.
- or 2019 the budget proposals, submitted in December, have growth at 3.0% whereas the IMF’s latest World Economic Outlook has 2.0%. Our forecast remains 2.9%. Turning to Q1 2019 data, we project growth at 2.1% y/y, driven by the non-oil economy with some support from election-related spending.