Why Nigeria's GPD Slowed In 2nd Quarter Of 2018
Nigeria's Gross Domestic Product (GDP) recorded a dip in the second quarter of 2018 from what it was in the first quarter of the same year.
A report of the National Bureau of Statistics (NBS) showed that the GDP recorded –0.45% points slower than 1.95% recorded in the first quarter of 2018.
Giving reasons the GDP slowed, a policy analyst, Dr. Boniface Chizea who spoke with Bounce News, highlighted a few variables that may have contributed to this.
Nigeria's economy in the report was classified into the oil and non-oil sectors, and the oil sector accounted for only 8.55% of the total GDP.
In the quarter under review, aggregate GDP stood at 30.69 trillion Naira in nominal terms.
This represents a 7.85% increase in nominal GDP when compared to the preceding quarter (28.46 trillion Naira ) and 13.57% increase when compared to the corresponding quarter of 2017 (27.03 trillion Naira).
The report showed that there was a shift in terms of the contribution of the oil sector, as growth in Q2 2018 was largely driven by developments in the non-oil sector.
However, the relatively slower growth when compared to Q1 2018 and Q2 2017 could be attributed to developments in both the oil and non-oil sectors.
In the oil sector, one major slowed input noticed was the drop in the barrels of crude oil production per day.
"In the second quarter of 2018, average daily oil production was recorded at 1.84 million barrels per day (mbpd), lower than the daily average production of 1.87mbpd recorded in the same quarter of 2017 by -0.03mbpd and also lower than the production volume of 2.0mbpd seen in the first quarter of 2018," the report read.
This highlights that Nigeria now produces an average of 1.8mbpd.
But Dr. Boniface says the decline in GDP growth should be expected by everybody because not much is happening within the economy.
"It is all politics and this means that we will be struggling to maintain certain things and, logically, where will the growth come from?
"If you look at the budget that should have activated some spending in the system, you will find out that it has been on hold, apparently because of the fight between the Executive and Legislature.
"Legislature is gone on recess, election is coming and portfolio investors are holding back.
"Normally, when election is coming, portfolio investors are scared they normally begin to reverse their investment and this is even worse in the sense that election is coming and the two arms of government are at loggerheads.
"It is a worsened risk factor," he highlighted.
The current administration has promoted agriculture so much that one will expect that by now the contribution from the sector would have been quite visible, but the gains in the sector, according to Dr. Chizea are being affected by the clashes in states topping in food production.
"Benue, Taraba and some others states where we expect food production to increase are all ravaged by insurrection.
"We are not producing enough food item as a result," he said, expressing fears that there could be food insecurity if the attacks by bandits are not adequately addressed.
Dr. Chizea also highlighted that the economic tussle between the United States and China would also have multiplier effect on Nigeria's economy.
"Trump's policies on trading partners like China is also affecting Nigeria. If they are suffering from Trump's anti-trade policy, and they are trying to contain the effect of this policy, they will begin to have a squeeze on their businesses with other nations' Nigeria inclusive.
"The heat will spread to everybody," he highlighted.
Dr. Chizea further projected that more decline could come in following quarter, as political activities become intense.
He then commended the NBS for its professional attitude in giving Nigerians the true state of the economy without being influenced by political sentiments.
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