Despite 5.5% Economic Growth, Financial, insurance contract by 2.48% in Q2


Despite real output growth rate of 5.01% to N16.69 trillion (or USD111.08 billion) as it recovered faster from last year’s recession.
The Financial and Insurance Sector contracted by -2.48 per cent in half year from -0.46 per cent in First Quarter 2021 and 18.49 per cent in half year, 2020, the National Bureau of Statistics (NBS) has said.

In a report, NBS stated that the Insurance under Financial and Insurance Sector witnessed a growth of 15.68 per cent in half year 2021 from -4.58 per cent in Q1 2021 and 29.53 per cent in Q2 2020.

Other financial institutions under Financial and Insurance Sector, however, contracted by -4.54 per cent in Q2 2021 from 0.15 per cent in Q1 2020 and 28.41 per cent in Q2 2020.

According to the report, the contribution of finance and insurance to real GDP totalled 3.72 per cent, lower than the 4.00 per cent recorded in the second quarter of 2020 by –0.29 per cent points, and the 3.77 per cent recorded in Q1 2021 by -0.05 per cent points.

The two subsectors accounted for 87.92 per cent and 12.08 per cent of the sector in real terms in Q2 2021.

On the whole, the financial and insurance services sector grew at -1.86 per cent in nominal terms (year on year), with financial institutions growing at -3.93 per cent while insurance recorded a growth rate of 16.41 per cent.

Going by the report, the overall rate was lower than that in Q2 2020 by –22.68 per cent points, and by -4.01 per cent points than the preceding quarter.

Quarter on quarter growth was -3.45 per cent while the sector’s contribution to the aggregate nominal GDP was 3.21 per cent in Q2 2021, lower than the 3.76 per cent it represented a year earlier, and the contribution of 3.25 per cent it made in the preceding quarter.

The NBS stated that growth in this sector in real terms totalled – 2.48 per cent, lower by – 20.97 per cent points from the rate recorded in the second quarter of 2020 and -2.02 per cent points from the rate recorded in the preceding quarter.

For the first half of the year, growth in financial and insurance services stood at -1.47 per cent year-on-year, compared to 19.63 per cent year on year for 2020. Quarter on quarter growth in real terms stood at -2.18 per cent.

Specifically, we have seen FG significantly ease lock down measures as households and businesses were allowed to resume economic activities. The several billions of Naira in economic stimulus packages provided by the monetary and fiscal authorities to help households and businesses cope with the effects of COVID-19 also supported the sharp economic recovery witnessed in the review period.
Particularly, the rapid growth was propelled essentially by a 6.74% growth in non-oil sector; with the trade, Information & Communication, Manufacturing and Agricultural sectors recording the biggest growth rates of 22.49%, 5.55%, 3.49% and 1.30% respectively. In the oil & gas sector, however, we saw a 12.65% y-o-y decline in real output to N1.24 trillion (or USD8.25 billion) as average daily oil production fell y-o-y by 12.29% to 1.42 million barrels per day (mbpd). We note that the increase in crude oil price did not compensate for the reduction in crude oil supply.