Nigeria’s economy slowed to 2.31% in Q1 2023 amid cash crunch

Nigeria’s economic growth slowed in the first quarter of 2023 as the Gross Domestic Product (GDP) grew by 2.31 per cent year-on-year within the quarter, the National Bureau of Statistics has said.

The statistics bureau said this in its “Nigerian Gross Domestic Product Report Q1 2023” released on Wednesday.

The NBS said this growth rate declined from 3.11 per cent recorded in the first quarter of 2022, and 3.52 per cent in the fourth quarter of 2022.

It said the reduction in growth is attributed to the adverse effects of the cash crunch experienced during the quarter.

According to the report, the performance of the GDP in the first quarter of 2023 was driven mainly by the services sector, which recorded a growth of 4.35 per cent and contributed 57.29 per cent to the aggregate GDP.

The bureau said the agriculture sector grew by -0.90 per cent, lower than the growth of 3.16 per cent recorded in the first quarter of 2022.

The NBS said although the growth of the industry sector improved to 0.31 per cent relative to -6.81 per cent recorded in the first quarter of 2022, agriculture and industry sectors contributed less to the aggregate GDP in the quarter under review compared to the first quarter of 2022.

According to the report, in the quarter under review, aggregate GDP stood at N51.24 trillion in nominal terms.

This performance is higher when compared to the first quarter of 2022 which recorded aggregate GDP of N45.3 trillion, indicating a year-on-year nominal growth of 13.07 per cent.

Oil sector

The bureau noted that the nation in the first quarter of 2023 recorded an average daily oil production of 1.51 million barrels per day (mbpd), higher than the daily average production of 1.49 mbpd recorded in the same quarter of 2022 and higher than the fourth quarter of 2022 production volume of 1.34 mbpd by 0.17 mbpd.

It said the real growth of the oil sector was –4.21 per cent (year-on-year) in Q1 2023, indicating an increase of 21.83 per cent points relative to the rate recorded in the corresponding quarter of 2022 (-26.04 per cent).

The NBS said that the growth increased by 9.18 per cent points when compared to Q4 2022 which was –13.38 per cent.

“On a quarter-on-quarter basis, the oil sector recorded a growth rate of 20.68 per cent in Q1 2023.

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“The oil sector contributed 6.21 per cent to the total real GDP in Q1 2023, down from the figure recorded in the corresponding period of 2022 and up from the preceding quarter, where it contributed 6.63 per cent and 4.34 per cent respectively,” the report said.

Non-oil sector

The non-oil sector grew by 2.77 per cent in real terms during the reference quarter (Q1 2023).

The NBS said this rate was lower by 3.30 per cent points compared to the rate recorded in the same quarter of 2022 and 1.67 per cent points lower than the fourth quarter of 2022.

“This sector was driven in the first quarter of 2023 mainly by information and communication (telecommunication), financial and insurance (financial institutions), trade, manufacturing (food, beverage and tobacco), construction, and transportation and storage (road transport), accounting for positive GDP growth.

In real terms, the non-oil sector contributed 93.79 per cent to the nation’s GDP in the first quarter of 2023, higher than the share recorded in the first quarter of 2022 which was 93.37 per cent and lower than the fourth quarter of 2022 recorded as 95.66 per cent,” it said.