Drop in Economic Growth Worries FG

By Dipo Olowookere

Federal government has expressed concerns over the slower growth recorded by the nation’s economy in the second quarter of 2018.

On Monday, the National Bureau of Statistics (NBS) disclosed that the Gross Domestic Product (GDP) grew by 1.50 percent in Q2 2018, lower than the 1.95 percent in the Q1 2018.

Reacting to this, Minister of Budget and National Planning, Mr Udo Udoma, explained that this was mainly due to the contraction in the Crude oil and Gas sectors, which was caused by some production issues already being addressed by Nigerian National Petroleum Corporation (NNPC).

For instance, average crude oil production was only 1.84 million barrels/day in Q2 2018 as opposed to an average production of 2 mil barrels/ day in Q1 2018, expressing confidence that once these issues are addressed, Nigeria should be able to achieve positive growth in the oil  and gas sector.

However, the Minister said government is encouraged by the continuing growth recorded in the non-oil sector, which grew by 2.05 percent in the period under review.

This, he noted, was evidence that the implementation of the targeted policies and programs of the Economic Recovery and Growth Plan (ERGP) was yielding positive results.

Mr Udoma said that he is happy to see that the Nigerian economy has continued to register positive growth in the first and second quarters of the year in spite of the security and other challenges faced by the country.

He emphasized that the focus of the Economic Recovery and Growth Plan (ERGP) is on diversifying the economy away from dependence on the oil and gas sector and was encouraged that efforts are yielding fruits by the continuing growth in the non-oil sector..

Mr Udoma noted that the 2.05 percent growth in the non-oil sector represents the strongest growth in the non-oil GDP since the fourth quarter of 2015.

According to the stats office, the non-oil growth was driven by Transportation (road, rail water and air).

Growth in Transportation grew by 21.76 percent, supported by Construction 7.66 percent and Electricity 7.59 percent; the three priority areas of the ERGP.

Other non-oil sectors that drove growth in Q2 2018 included Telecoms which grew by 11.51 percent, Water supply and Sewage 11.98 percent and Broadcasting by 21.92 percent.

However, the Oil and Gas sector contracted by 3.95 percent in Q2 2018 compared with a growth rate of 14.77 percent recorded in Q1 2018 and 3.53 percent in Q1 2017.

The Minister emphasized that the Nigerian economy needs growth from both the oil, as well as the non-oil sectors, to achieve its Economic Recovery and Growth Plan (ERGP) growth targets.

He said another area of concern for government was the slightly weaker growth in the Agriculture sector which slowed to 1.19 percent in the second quarter in 2018 compared with 3 percent in the first quarter of 2018.

This, he said, was partly attributable to security challenges mainly in the north-east and north-central zones of the country.

These security challenge affected activities of farmers with impact on commodity output; but the Minister indicated that the various measures being taken by government to tackle the situation is already reducing incidents of violent conflicts & other disruptions to farming activity.

The Minister said he is happy to see that Industry has continued to maintain a positive growth rate as a result of the performance of Manufacturing and Solid minerals which retained positive growth of 0.68 percent and 5.24 percent respectively in the second quarter of 2018.

Also, the Services sector recorded its best GDP performance in nine quarters, growing by 2.12 percent in the second quarter of 2018 compared to a contraction of 0.47 percent in the first quarter of the year and of -0.85 percent in second quarter of 2017.

Mr Udoma expressed that he was encouraged by these GDP growth results which he said is also consistent with improvements in other indicators including inflation and capital inflows, amongst others.

According to the NBS, headline inflation has consistently declined every month since January 2017 through July 2018 from 18.72 percent to 11.14 percent.

The consecutive disinflation year on year, which is the eighteenth in a row, has resulted in the lowest rate of inflation since June 2016.

He was also happy to note that the Nigerian economy has continued to attract significant capital inflows, which stood at $5.5 billion in the second quarter of 2018, representing a 207.62 percent increase compared to the second quarter of 2017.

While capital importation declined slightly in the second quarter of 2018, the total for the first half of 2018 at $11.8 billion represents the highest half year capital importation since 2014, indicating increasing confidence in the Nigerian economy, he pointed out.

The Minister expressed optimism that as government intensifies its activities in the implementation of the Economic Recovery and Growth Plan, the economy will sustain this growth momentum.

He conceded that, whilst the nation still has some ways to go to achieve the target growth rates of the ERGP, these continuing positive results are signs that the country was moving in the right direction.

Mr Udoma reiterated the commitment of the present administration to turn #Nigeria around to become a productive country where citizens “grow what we eat, consume what we make and use what we produce,” thereby providing jobs for our teeming population.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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