Nigerian Economy Achieves 4.03% Growth Rate In Gross Domestic Product

Despite the challenges confronting the nation’s economy, Nigeria still managed to achieve a 4.03% growth in real terms in the Gross Domestic Product (GDP) for the third quarter of 2021.

This growth was achieved in the third quarter of 2021 and showed sustained positive growth over the last four quarters since the recession happened in 2020.

Output contracted by -6.10% and -3.62% in Q2 and Q3 of 2020 under the Covid pandemic. The Q3 2021 growth rate was higher than the -3.62% growth rate recorded in Q3 2020 by 7.65% points and lower than 5.01% recorded in Q2 2021 by 0.98% points, indicative of continuous recovery.

Nevertheless, quarter on quarter, real GDP grew at 11.07% in Q3 2021 compared to Q2 2021, reflecting a higher economic activity than the preceding quarter.

According to an official report from the Nigerian Bureau of Statistics through its website, https://www.nigerianstat.gov.ng. 

”In the quarter under review, aggregate GDP stood at N45.11 trillion in nominal terms. This performance is higher when compared to the third quarter of 2020 which recorded aggregate GDP of N39.09 trillion, indicating a year-on-year nominal growth rate of 15.41%.” it reads.

“The nominal GDP growth rate in Q3 2021 was higher relative to 3.39% growth recorded in the third quarter of 2020 as well as the 14.99% growth recorded in the preceding quarter.”

The report showed that there was growth in all sectors of the Nigerian economy. The sustained monetary and fiscal policies support of the Federal Government played a critical role in achieving this figure.

Despite, the decline in oil production when compared with the daily average production of 1.67mbpd recorded in the same quarter of 2020 by 0.10mbpd and lower than the second quarter 2021 production volume of 1.61mbpd by 0.05mbpd.

The oil sector succeeded in contributing 7.49% to total real GDP in Q3 2021, down from figures recorded in the corresponding period of 2020.

This decline could be attributed to an agreed drop in oil production amongst OPEC members. This move was to drive the price of crude oil upward as it currently trades at USD75.74 for WTI and USD78.41 for London Brent.

However, the Non-Oil sector grew by 5.44% in real terms during the reference quarter (Q3 2021). This rate was higher by 7.95% points compared to the rate recorded same quarter of 2020 and 1.30% points lower than the second quarter of 2021.

This sector was driven in the third quarter of 2021 mainly by trade, Information, and Communication (Telecommunication); other drivers include Financial and Insurance (Financial Institutions); Manufacturing (Food, Beverage & Tobacco); Agriculture (Crop Production); and Transportation and Storage (Road Transport), accounting for positive GDP growth.

In real terms, the Non-Oil sector contributed 92.51% to the nation’s GDP in the third quarter of 2021, higher than the share recorded in the third quarter of 2020 which was 91.27%, and lower than the second quarter of 2021 recorded as 92.58%.

The growth achieved in this sector can be attributed to expansionary monetary and fiscal policies adopted to drive sustained economic activities.

The injection of borrowed funds through several FGN Bonds, prudent fiscal spending, pruning down of government weight and redirecting capital to the real sectors especially the agriculture sector helped achieve this growth.

According to a business analyst at www.researchitlive.com who expressed joy about this growth, the government ought to exercise caution so that the artificial fiscal sweetener won’t explode in the future.

He fears that reckless spending and FX challenges could create macro imbalances in the future.

“Even though we have achieved this great feat especially looking from the angle that we just came out of a recession I expect the government to close leakages and continue with its sectoral spending", he said.