Presidency Reacts to Drop in GDP by 0.52% in Q1 2017

By Modupe Gbadeyanka

The Presidency has reacted to the latest figures released by the National Bureau of Statistics (NBS) on Tuesday, showing that the economy shrank by 0.52 percent in the first quarter of 2017.

In a statement issued on Tuesday by the Presidential Adviser on Economic Matters, Dr Adeyemi Dipeolu, the Presidency said although the economy remains in recession, this remains the strongest performance in five quarters and shows a significant turnaround from the low of -2.34 percent reached in the third quarter of 2016.

Mr Dipeolu said this is 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.

In the figures released by the NBS, agricultural growth remained in positive territory albeit growing at a slower rate of about 3.4 percent, no doubt due to seasonal factors.

But 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 mineral 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 percent although there was an over six percentage point improvement in its fortunes from the previous quarter.

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.

Headline inflation fell for the third month in a row to 17.24 percent, with core inflation also declining quite rapidly.

However, food inflation remains of concern as it continues to trend upwards. This is mainly due to rising transport costs and other structural impediments to the movement of foods in the domestic market.

The trade balance remained positive reflecting import contraction and relatively higher export revenues which grew year-on-year by up to 80.5 percent. The overall picture that the figures show is that the economy is emerging slowly out of recession.

According to the Presidency, this outlook is reinforced by positive trends in other indicators such as improved oil prices and increasing production, rising foreign exchange reserves, increased capital spending by the Federal Government as well as improved perceptions reflected in various purchasing and sales managers indices.

He said barring major economic shocks, it should still be possible to restore growth this year as projected in the Economic Recovery and Growth Plan.