Nigeria records 2.55% Real GDP Growth on Strong Non-Oil Sector Performance.

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• In line with our expectation, Nigeria’s real Gross Domestic Product grew year-on-year (y-o-y) by 2.55% to N19.53 trillion in Q4 2019, faster than 2.28% growth registered in Q3 2019.

Hence, full year 2019 real GDP grew by 2.27% to N71.39 trillion (or about USD450 billion) – a little shy of IMF’s 2.30% growth estimate for 2019. The Non oil sector, accounting for 92.68% of total GDP, was the main driver of growth having climbed 2.26% to N18.10 trillion in Q4 2019 (faster than +1.85% in Q3 2019).

• The agricultural sector, which accounted for 26.09% of total GDP, grew y-o-y by 2.31% in Q4 2019, faster than 2.28% in Q3 2019. Remarkably, the financial services sector spiked by 20.18% even as it accounted for 3.19% of real GDP.

• The oil & gas sector also grew y-o-y by 6.39%, albeit slower than 6.49% recorded in Q3 2019 – the sector actually recorded a quarterly plunge of -20.87% amid lower crude oil production volumes and prices.

We opine that Nigeria’s Q1 2020 real GDP may be negatively impacted by external shocks, especially from expected weakness in global consumption as the world battles to contain COVID-19 virus.

Slower expansion in manufacturing and non-manufacturing PMIs of 59.2 (from 60.8) and 59.6 (from 62.1) in January 2020 also suggest sluggish growth for Q1 2020.

However, we expect early implementation of the 2020 budget, expecially on capex, as well as anticipated adoption of the N30,000 new minimum wage should provide some support to growth.

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