Nigerian GDP grows 3.11% in first quarter Q/Q ahead of rates decision

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ABUJA, May 23 – Nigerian GDP grew 3.11% in the first quarter, slower than in the previous quarter as a fall in oil production hit the rest of the economy, the national statistics office said on Monday ahead of a central bank interest rate decision on Tuesday.

It was the sixth consecutive quarter of growth, with non-oil sectors helping Nigeria bounce back from a severe recession caused by the COVID-19 pandemic. The full-year GDP figure for 2021 showed the fastest growth in seven years.

Gross domestic product grew by 3.98% in the fourth quarter of 2021. In the first three months of last year, the growth rate was 0.51%.

“After the recession experienced by the country in 2020 occasioned by the COVID-19 pandemic, the economy has been on the path of growth,” the National Bureau of Statistics (NBS) said.

It said non-oil sectors such as financials, communication, trade and healthcare were among the fastest growing.

However, oil refining, crude petroleum and natural gas, road transport, quarrying and other minerals were lagging.

The naira , hit a record low of 609 against the dollar on the black market, where it is freely traded, as the GDP data was announced.

The oil sector shrank by 26.04% in the first quarter, compared with an 8.06% contraction the previous quarter. Crude production fell to 1.49 million barrels per day in the first quarter from 1.50 million barrels in the previous three months.

Frequent vandalism and illegal refining in the oil-producing Niger Delta region have kept the sector under pressure. Nigeria has struggled to meet its production targets, partly missing out on the effects of the global surge in oil prices.

Russia’s invasion of Ukraine last month has added to volatility in financial markets, sending commodity prices higher and affecting logistics, potentially derailing the economic recovery from COVID-19 in Nigeria and elsewhere.

A central bank official said “six members of the MPC are retiring tomorrow, they did not want to be caught in the web of illegality.”

A standoff in 2018 between Nigeria’s presidency and parliament over confirmation of new members of the central bank’s MPC threatened the bank’s independence after the bank could not form a quorum for meetings.

Nigeria faces double-digit inflation and low revenues which has hampered its ability to stimulate the economy.

The economy recorded its fastest growth in seven years in 2021 despite a slight slowdown in the fourth quarter due to oil production problems, but growth is still fragile.

The central bank wants to boost growth and curb inflation at the same time but faces limited policy options.

“With real rates negative for some time… a forceful monetary policy response to the threat of higher inflation will remain difficult,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered.

The weak growth could prompt the central bank to keep its dovish stance at a policy meeting on Tuesday despite double-digit inflation, analysts say.