Economists in government and private circles are raising confidence that Nigeria’s second quarter, 2017 Gross Domestic Product (GDP) numbers will possibly show that the country has exited economic recession on account of strong performance in agriculture, manufacturing, telecoms and oil.
Their confidence is boosted by the fact that these four, out of the six largest contributors to the coutry’s GDP, are already showing strong performance.
The six sectors include agriculture, manufacturing, telecoms, trade, real estate and crude. Already, agriculture, manufacturing, telecoms and crude, will likely continue to show strong performance, the economists believe.
The numbers will also likely show that the real estate and trade sectors (obviously because of high inflation and forex contraints) will likely continue in negative but may not be strong enough to counter the positive gains in the other four sectors.
“It is possible that Nigeria could have returned to positive growth in the second quarter, considering that four out of the six key sectors that drive the coutry”s GDP are already in a positive trend,” an economist at the NBS projected.
“It is also possible that this may not be the true position until we see the full numbers,” he quickly added.
Focus is now on the National Bureau of Statistics (NBS) which is billed to release the Q2 GDP report on August 23 as contained in its data release calendar.
Raising hope that Africa’s largest economy could jump out of recession, GDP numbers showed a contraction of 0.52 percent in the first quarter of 2017.
Although the economy remains in recession, it showed the strongest performance in five quarters, a significant turnaround from the low of -2.34 percent reached in the third quarter of 2016.
This is a nearly two percentage point improvement and also reflects the fact that the number of sub-sectors that experienced negative growth has almost halved, falling from 29 sub-sectors for the whole of 2016 to 16 sub-sectors in Q1 2017.
Agricultural growth remained in positive territory, albeit growing at a slower rate of about 3.4 percent, no doubt due to seasonal factors.
Growth in manufacturing on the other hand, returned to positive territory after five quarters of negative growth. It grew by 1.36 percent in Q1 2017 after falling to a nadir of -7.0 percent in Q1 2016.
The solid minerals sector continued to justify the priority given to it by the Federal Government, with high double digit growth for metal ores and quarrying at 40.79 percent and 52.54 percent respectively.
Growth in the oil sector remained negative at -11.64, though it showed an over six percentage point improvement in its fortunes from the previous quarter.
Oil production averaged 1.83 million barrels per day, 0.07 million barrels higher than the daily average production recorded in the fourth quarter of 2016.
More significantly, the non-oil sector, which accounts for about 90 percent of GDP returned to positive growth, although at a marginal level of 0.72 percent in Q1 2017. This is the first positive growth in the non-oil sector since the last quarter of 2015.
“There has to be a big negative shift in agriculture, telecoms, crude, and manufacturing and also a substantial upward movement in real estate and trade, to be able to offset the positive growth pattern. For now, we are not seeing that trend,” the NBS economist further explained to BusinessDay.
Besides, Nigeria’s economy has seen significant improvement, especially in critical sectors since last March.
The latest Purchasing Managers’ Index (PMI) reading in May, is also supporting a positive growth trend.
According to data from the Central Bank of Nigeria (CBN) the average manufacturing and non-manufacturing PMI in the months that make up the second quarter (April, May and June) was 52.1 points.
Readings above 50 are indicators of increasing activity and tend to precede Nigeria’s GDP growth, according to a trend analysis computed by Financial Quest.
Faced with battered confidence, the APC led administration appears desperate to see the economy pick up to positive growth, no matter how low.
But analysts also caution that exiting recession does not mean the economy is completely out of the woods.
In a recent interview, Yemi Kale, Statistician-General of the Federation, confirmed that most of the indicators suggest that Nigeria is coming out of the economic recession, but that it is not ‘uhuru’ yet.
“It’s as if the worst has already happened and it’s a slow process of recovery. We have not come out of it yet. Now there is what we call technical recovery, as different from the recovery Nigerians would prefer.
“When you tell somebody the economy is coming out of recession, they would ask what do you mean. After all prices are still high. Coming out of recession means positive growth. And your positive growth can be plus zero point one (+0.1).
“That does not mean everything is fine. It technically means you are no longer in negative again. The fact that you are no longer in negative does not translate to being buoyant.
“There is going to be a gradual process of recovery. Definitely, things are improving. At least all the indicators are suggesting things are getting better,” he further explained.
“If the trend continues, by the end of the year things should have normalised and by 2018 Nigerians, would now see the benefit of the recovery. If oil prices do not collapse including Niger Delta crisis, by 2018 we would have recovered,” Kale said.
Onyinye Nwachukwu, Abuja
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