The recent report by the National Bureau of Statistics shows data on the Gross Domestic Product estimates using expenditure and income approach.
According to the report, in the first quarter of 2021, Nigeria’s real GDP at basic prices grew by 0.51 percent on a year-on-year basis showing a steady improvement in the economy following the 2020 Q4 GDP rate of 0.11 percent. Growth, however, improved further in the second quarter of 2021 with a positive GDP growth rate of 5.01 percent.
The gross domestic product measures the total value of monetary services within a specific period. It’s equivalent to what is being spent in that economy.
However, unlike the output approach which measures the supply side of the GDP, the income and expenditure approach gives a clear insight into the demand side of various economic agents.
The four components of the GDP are household consumption, private investment, government spending, and net exports.
These components explain that the GDP or output is a function of household consumption, government expenditure, investments and net export indicated as Y= C + G + I + (X-M).
Consumer spending (C)
Consumer spending (C) is what households buy to meet everyday needs. This consumption includes both goods and services.
According to data from the NBS, household expenditure rose 18.8 percent to N27.1 trillion in Q2 2021 compared to 22.8 percent in the same period of 2020.
Government expenditure (G)
Government expenditure summarises government spending on goods and services. It includes the purchase of intermediate goods and wages and salaries paid by the government.
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Government spending plunged 53.3 percent to N2.16 trillion in Q2’2021 compared to N4.63 trillion in Q2 2020.
Gross fixed capital formation or Investment
Investment (I) means additions to the physical stock of capital during a period of time.
Investment Includes building of machinery housing construction, construction of factories and offices and additions to a firm’s inventories of goods.
Private investment surged 46 percent to N13.43 trillion in the second quarter of 2021 compared to N9.20 trillion in the same period last year.
Net Exports
(X-M) shows the difference between domestic spending on foreign goods (i.e., imports) and foreign spending on domestic goods (i.e., exports). Therefore, the difference between Exports (X) and Imports (M) of a country is called Net Exports.
Net exports grew 71.6 percent to N9.22 trillion in Q2 2021 from N5.37 trillion in the second quarter of 2020.
National Disposable income
National Disposable Income is the sum of the disposable incomes of all resident institutional units. Gross National Disposable Income measures the income available to the nation for final consumption and gross saving.
Nigeria’s national disposable income rose to N38.6 trillion in Q2 2021, 14.8 percent compared to N33.60 trillion in Q2 2020.
