Economy to grow by 3.2% in Q2 2021 – Experts

With the 0.51 per cent in Nigeria’s Gross Domestic Product (GDP) growth recorded in the first quarter (Q1) of 2021, economic analysts have expressed optimism that the nation’s economy could jump by 3.2 per cent by the end of the second quarter (Q2).

This was as they speculated that there would be renewed pressure in food inflation citing increased demand amidst a limited supply level given the ongoing planting season.

According to a report released by the National Bureau of Statistics (NBS), the 0.51 per cent rise is an improvement over the 0.11 per cent increase recorded in the fourth quarter (Q4) of 2020. The NBS report stated that aggregate GDP stood at N40.01 million in nominal terms as against N35.65 million recorded in Q1 2020 while on a quarter-on-quarter basis, real GDP grew at -13.93 per cent in Q1 2021 compared to Q4 2020, reflecting a generally slower pace of economic activities at the start of the year.

Commenting on the data, analysts at Cordros Research, noted that their attribution analysis of the NBS report revealed that the GDP growth in the quarter was primarily driven by Agriculture and Industries, which contributed 0.50 and 0.22 per cent, respectively while adding that the growth in both sectors helped to neuter the negative contribution of the Services (-0.21 per cent) sector to the GDP growth rate.

They explained that with the country faced with a high base in the corresponding period of last year, oil GDP was expected to continue its double-digit decline in Q1 2021 but contrary to their expectations, the sector surprised positively as it declined moderately by -2.21 per cent y/y in Q1 2021 as against (Q4 2020: -19.76 per cent y/y).

According to them, “Firstly, we expect the oil sector to return to growth in Q2 2021, on account of improved crude oil production based on the latest OPEC+ production agreement, which allows Nigeria to reduce the magnitude of its allocated production cut to 0.29mb/d in May and 0.28mb/d in June compared to an average of 0.31mb/d in Q1 2021.