Nigeria’s Economy Shows Signs of Recovery Amid Q3’2023 GDP Figures

The Nigerian Bureau of Statistics recently released the Gross Domestic Product (GDP) data for the third quarter of 2023, and there are some cautious signs of optimism regarding the country’s economic recovery. While the GDP figures weren’t entirely positive, the data showed a 2.5 percent year-on-year growth in real terms, indicating a slight improvement from the previous quarter.

According to analysts at Afrinvest West Africa and CardinalStone Capital, there is hope for increased oil production in the coming months, which could significantly contribute to the overall GDP for the year 2023. They also anticipate growth in the service sector, particularly in the telecommunications and financial services sub-sectors. Additionally, the transport, storage, and trade sub-sectors are expected to perform well in the fourth quarter of 2023, driven by seasonal business activities during the festive periods.

However, despite the positive performance in Q3:2023, analysts have adjusted their full-year GDP forecast from 3.2% to 2.7% for 2023. They anticipate growth in the oil sector, as well as positive impacts on the agricultural and industrial sectors due to year-end festival activities.

Looking at the specifics of the GDP data, the communications and information sector grew by 6.7% year-on-year, benefiting from significant investments in infrastructure and an expansion in the subscriber base. Manufacturing, trade, and construction also saw modest growth, while the mining and quarrying sector experienced a decline year-on-year, but showed a quarter-on-quarter growth in Q3:2023. The transportation and storage sector, however, contracted, reflecting the negative effects of various factors such as the subsidy on petrol, flooding, and insecurity concerns.

In terms of oil production, the average daily output saw an improvement, which translated to an overall improved GDP performance in the oil sector.

Despite these positive indicators, the non-oil sector experienced weaker growth, likely attributed to a reduction in direct development finance interventions by the Central Bank of Nigeria. Additionally, sustained increases in domestic interest rates and currency pressures may have contributed to slower growth in sectors such as manufacturing and services.

The GDP data for Q3’2023 has highlighted both the strengths and weaknesses of Nigeria’s economy, indicating signs of recovery in certain sectors while also showing areas that require attention to stimulate growth. As the year comes to a close, analysts remain cautiously optimistic about Nigeria’s economic prospects and are hopeful for a sustained recovery.