Nigeria’s GDP slows to 2.3% as Naira crunch fuels agric sector contraction

National Bureau of Statistics has said that Nigeria’s Gross Domestic Product (GDP) grew by 2.31% year-on-year in real terms in the first quarter of 2023. This growth rate declined from 3.11% recorded in the first quarter of 2022, and 3.52% in the fourth quarter of 2022. The reduction in growth is attributed to the adverse effects of the cash crunch experienced during the quarter. The performance of the GDP in the first quarter of 2023 was driven mainly by the Services sector, which recorded a growth of 4.35% and contributed 57.29% to the aggregate GDP. The agriculture sector grew by -0.90%, lower than the growth of 3.16% recorded in the first quarter of 2022. Although the growth of the industry sector improved to 0.31% relative to – 6.81% recorded in the first quarter of 2022, agriculture, and the industry sectors contributed less to the aggregate GDP in the quarter under review compared to the first quarter of 2022. 

The slower pace of growth according to NBS was due to the 90-bp contraction recorded in the Agric sector, the first contraction in over a decade. The overall slower growth can be attributed to the negative impacts of the cash crunch witnessed in the period. Asides from the Agric sector which booked a contraction of 0.9%, growth in key labour-elastic sectors such as Trade and Education slowed markedly to 1.3% and 0.7% from 6.9% and 1.9% respectively in Q1’22. Compared to the 01’22, the share of the non-oil economy firmed up 40bps to 93.8%, supported by y/y growth in ICT (10. 2%) Financial services (71. 1%) and Manufacturing (1.6%). Aided by improved average output level (1.51mbpd vs 1.49mbpd in Q1’22), the Oil sector’s contraction eased to 4.2% (lowest since 04’21 at -8.1%). Nonetheless, the sector’s recession spell extended to 12 quarters.

Overall, oil contribution to GDP printed at 6. 2%.