By Anthony Osae-Brown and Ruth Olurounbi
Oil sector’s second-quarter rebound fails to halt slowdown
Economy needs fiscal and monetary stimulus, economist says
Economic growth in Africa’s largest oil producer slowed for the third consecutive quarter, adding further pressure on the government to fight rising poverty.
Gross domestic product expanded 1.94% in the three months through June from a year earlier, the Abuja-based National Bureau of Statistics said in a report on its website Tuesday. That compares with a revised expansion of 2.1% in the first quarter and a median estimate of 2.46% in a Bloomberg survey. Growth is at its lowest level since the third quarter of 2018.
The oil sector, which accounts for 10% of economic output, expanded by 5.15%. That’s the quickest pace since the third quarter of 2018, even as crude output was little changed at 1.98 million barrels per day.
“The recovery in oil GDP looks promising,” Razia Khan, Standard Chartered Bank Plc’s chief economist for Africa and the Middle East, said in an emailed statement. “However, given softer oil prices in subsequent quarters this pace of growth may not be sustained.”
The non-oil sector grew at a slower pace of 1.64%, placing a drag on the overall economic performance.
After averaging more than 7% in the first 14 years of this century, annual growth in Nigeria’s economy, which vies with South Africa as the continent’s largest, hasn’t managed to top 3% for the past four years.
The United Nations expects Nigeria’s population to double to 410 million by 2050 at the current pace of growth. President Muhammadu Buhari, who was re-elected in February, has promised to lift 100 million people out of poverty over the next 10 years.
After a few years of massive spending to boost the economy following a 2016 contraction, Nigeria’s Senate approved a reduced budget for 2019 as the government struggles to meet revenue targets.
The central bank has stepped in to support expansion, first with an interest-rate cut in March and thereafter by forcing lenders through regulations and penalties to extend more credit, especially to to small- and medium-sized businesses and households.
“Firmer GDP recovery will require stronger, largely fiscal and reform stimulus,” Khan said. “Monetary easing alone is unlikely to be sufficient.”