The Nigerian economy grew at a slower pace last year compared to 2021 owing largely to the poor performance of the agriculture and industry sectors, official data released on Wednesday show.
The National Bureau of Statistics (NBS) said the country’s Gross Domestic Product growth fell to 3.1 percent in 2022 from 3.4 percent in 2021.
The NBS said the performance of agriculture and industry sectors reduced in 2022 relative to 2021, while the performance of the services sector improved in 2022.
“Although the agriculture sector grew by 2.05 percent in the reference period, its performance was significantly hampered by severe incidences of flood experienced across the country, accounting for lesser growth relative to the fourth quarter of 2021 which was 3.58 percent,” it said.
It added that the industry sector was yet challenged, recording
-0.94 percent growth and contributing less to the aggregate GDP relative to Q3 of 2022 and the Q4 of 2021.
“The Russia-Ukraine war had an impact in flattening demand for key import inputs, especially for the industrial component of the economy. Also, the high domestic energy prices led to increase in operational costs for businesses,” Ikemesit Effiong, head of research at SBM Intelligence, said.
“Agric and industry have been impacted by insecurity and the quantitative effect of the floods that occurred towards the end of Q3. These sectors lost a lot in terms of farm produce especially for agro-allied industries.”
The agric sector’s GDP growth rate slowed to 1.88 percent in 2022 from 2.13 percent in 2021, while industry contracted further to 4.62 percent last year from 0.47 percent. The services sector expanded to 6.66 percent from 5.61 percent.
Damilola Adewale, a Lagos-based economic analyst, said: “Although, the 3.1 percent is a marginal slowdown, I feel it is quite a good performance. Despite the fact that bodies like the World Bank and International Monetary Fund revised their 2022 growth projection downwards, the economy managed to pull 3.1 percent.
“Again, if you also consider the headwinds faced in 2022, the Russia-Ukraine war, skyrocketing prices and other structural issues facing the nation, a 3.1 percent is not bad.”
Analysts at Financial Derivatives Company Limited (FDC), in their latest 2023 economic outlook, forecast that Nigeria’s real GDP growth will slow to 2.55 percent in 2023 from an estimated growth rate of 2.71 percent in 2022.
However, the FDC said the worst and best-case projections show growth may slow to a low of 1.33 percent or expand by 3.10 percent in 2023 respectively.
“The subdued growth would be bookended by the naira cash crunch, election uncertainty, weak private consumption growth, and a tepid investment outlook. Elevated inflation, the naira redesign program, and restrictive monetary policy will also weigh on the overall outlook,” FDC analysts said.
On Saturday, Nigerians registered to vote will choose among 18 candidates to replace President Muhammadu Buhari, who has reached the two-term limit.
“The main presidential candidates have offered hope of a shift away from President Buhari’s growth-sapping policies, but this will not be painless. Overall, we expect GDP growth of just 2.3 percent this year, which is below the consensus,” analysts at Capital Economics said.
“Even if the elections pass smoothly and disruptions from demonetisation ease, Nigeria’s economy is likely to remain on a low-growth path,” they added.