Nigerian Economic Growth Slows on Oil Industry’s ContractionDaniel Magnowski
Economic growth in Nigeria, Africa’s biggest crude producer, slowed in the first quarter as the oil industry contracted amid a slump in prices, according to the country’s statistics bureau.
Expansion in gross domestic product eased on an annual basis to 4 percent compared with 5.9 percent a quarter earlier, the National Bureau of Statistics said in a statement on its website. The oil sector in the continent’s biggest economy shrunk 8.2 percent after a contraction of 6.6 percent in the fourth quarter even as production was almost unchanged at 2.18 million barrels per day, it said.
Nigeria, which has elected a new president who will be sworn in May 29, is struggling to cope with an almost 40 percent decline in oil prices over the past year, sales of which provide two-thirds of the state’s revenue. The naira has lost 13 percent of its value against the dollar in the past six months, driving the rate of inflation to a 21-month high of 8.7 percent in April, the statistics agency said on Thursday.
“Rising inflation will put pressure on consumers’ purchasing power and could well prompt monetary tightening,” analyst Cobus de Hart at NKC Independent Economists in Paarl, South Africa, said in e-mailed comments. “Meanwhile, the cash-strapped government is not really in a position to attempt to boost economic growth.”
The government by early this month had already borrowed more than half the amount it budgeted for the full year as it contends with a “cash-flow crunch,” Finance Minister Ngozi Okonjo-Iweala said. The central bank left its key lending rate unchanged at 13 percent in March.
The oil industry represented 10.5 percent of the country’s first-quarter GDP, rising from 9 percent in the three months through December, the statistics agency said. Non-oil growth was 5.6 percent in the first quarter, compared with 6.4 percent in the fourth quarter of last year.
The level of unemployment was at 25.1 percent last year, according to revised data from the agency.