LAGOS – Nigeria’s gross domestic product fell by 1.5 percent in 2016 due to lower oil revenues, the National Bureau of Statistics said on Tuesday, for its first annual contraction in 25 years.
Africa’s largest economy slid into recession in the second quarter of 2016 as a slump in crude prices hammered the OPEC member’s public finances. Crude sales make up two-thirds of government revenue.
Fourth-quarter GDP shrank by 1.3 percent, the statistics office said. The oil sector declined by 12.38 percent year-on-year in the quarter.
“This contraction reflects a difficult year for Nigeria, which included weaker inflation-induced consumption demand, an increase in pipeline vandalism, significantly reduced foreign reserves and a concomitantly weaker currency,” the office said in a report.
Oil production – Nigeria’s economic mainstay – fell to 1.833 million barrels a day last year after 2.13 million bpd in 2015, it added, blaming militant attacks in the Niger Delta oil hub.
The non-oil sector fell only by 0.33 percent in the fourth quarter, the office said.
“The very shallow contraction in non-oil GDP growth in Q4 2016, raises hope of a more meaningful recovery in non-oil GDP in Q1 2017, buoyed both by improved budget spending and some improvement in FX availability,” said Razia Khan, Chief Economist Africa at Standard Chartered Bank.