Nigeria's Economy May Have Grown in Second Quarter, NBS Says

Updated on
  • Factory, farming output seen expanding, while trade may shrink
  • Little oil, telecommunications growth; real estate to drop

Nigeria’s economy probably expanded in the second quarter as factory and farming output improved, helping it recover from the first annual contraction in 25 years, Statistician-General Yemi Kale said.

“Intuitively, we might be getting out of recession in the second quarter, but I can’t say until all the numbers are in,” Kale, who is also chief executive officer of the National Bureau of Statistics, said in an interview Wednesday at his office in Abuja, the capital. “If it doesn’t happen in the second quarter, it will be a much more reduced negative, and it will definitely happen in the third quarter unless we have a new round of shocks in the later weeks.”

The West African nation’s economy, which vies with South Africa’s as the continent’s biggest, shrank 0.5 percent in the first three months of the year, a fifth straight quarter of contractions. The economy declined 1.6 percent in 2016, the first full-year drop since 1991.

“Provided that non-oil growth remains stable, the economy as a whole returned to growth last quarter,” Capital Economics’ William Jackson said. “We expect headline growth of about 2 percent year on year,” he wrote Friday in an emailed note. The oil sector is expected to have seen higher output volumes during the period under review, the emerging-markets economist said.

Of the six industries that make up more than half of the economy, manufacturing and farming will grow in the second quarter, trade and real estate will probably contract, while crude and telecommunications might shrink or expand marginally, Kale said.

Factory Costs

Factory costs dropped in the quarter after the central bank introduced a window for investors to trade foreign currency at market-determined prices in April, making dollars more readily available to pay for imported inputs. Monetary authorities also asked banks to start quoting prices on the so-called Nafex currency window, which has almost wiped out a premium of about 20 percent on the black market. The naira was little changed at 365.2 per dollar by 1.27 p.m. in the commercial hub, Lagos.

More rice farming will help agriculture continue its expansion, Kale said.

Data from the Organization of Petroleum Exporting Countries shows production from Nigeria, which is the continent’s biggest producer, averaged 1.68 million barrels daily in the second quarter, more than the 1.55 million barrels a year earlier.

Preliminary data shows a slowdown in telecommunications in the second quarter, Kale said. Subscribers to both fixed-line and mobile networks dropped to 143 million in June from 152 million in March, the Nigerian Communications Commission said on its website.

The trade and real estate sectors, whose output is tied to household incomes, will probably contract as high inflation reduces consumers’ ability to spend, Kale said. While growth in consumer prices slowed to 16.1 percent in June, it remains above the upper end of the central bank’s target band of 6 percent to 9 percent.

The statistics bureau plans to release its second-quarter GDP report on Sept. 4.

(Updates with economist’s comment in first paragraph under chart.)
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