Q4 2023: Nigeria’s GDP Report

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The just released Nigeria’s GDP result showed the country grew by 3.46% YoY in the final quarter of 2023 in real terms. The country’s GDP grew by 2.74% in 2023 from its 2022 figure of ₦74,639,468.94 (Million) to ₦76,684,940.77. 
The growth in GDP seen in Q4 2023 represents the 13th consecutive quarter the country has recorded growth since Q3 2020 during the COVID-19 pandemic which caused a slowdown in economic activity.

The major driver of the growth witnessed in Q4 is the improved performance of the services sector, which grew by 3.98%, contributing 56.55% to the quarter’s real GDP figure. The Agriculture and Services sector contributed 26.11% and 17.34% respectively.

In 2023, the Services sector contributed 56.8% to the aggregate GDP (real), while the Agriculture and Industries added 25.18% and 18.65%. It is also worth noting that 5.4% of 2023’s GDP (real) was gained from the oil sector.

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THE COUNTRY’s RESILIENCE

Despite the turmoil people and businesses went through in 2023, the country grew at an increasing rate throughout the year. Nigeria recorded a yearly growth of 2.74% in the year, although, this was less compared to the yearly growth of 3.1% recorded in 2022; the country still showed resilience in the wake of the pressures. In a bid to rescue the country, the new administration, in the second quarter of 2023 removed the subsidy on fuel and floated the currency allowing market forces to determine the exchange rate. These moves increased hardship in the country with the exchange rate rising at a fast rate and prices of food and other items soaring higher.

ENDURING YET FADING

However, based on the country’s yearly performance, it may be safe to say the country is slowly running out of gas. As the country’s yearly growth has begun to decelerate. As shown in the graph below, the country’s growth speed has slowed down since the country’s GDP big jump of 3.4% in 2021.

ANALYST’S COMMENT

Despite the reported growth rate in the GDP, the country exhibits signs of economic vulnerability, with the growth momentum declining by 0.36%. This challenging scenario is compounded by the simultaneous rise in inflation, soaring by 0.98% to reach 2.99%, and an increase in the unemployment rate by 0.8%, reaching 5%.

As the Central Bank of Nigeria (CBN) approaches the upcoming Monetary Policy Committee (MPC) meeting, a critical decision looms regarding the interest rate. The committee must weigh the option of maintaining a bullish stance, risking the exacerbation of growing inflation and potential adverse effects on the economy, or adopting a more assertive approach to address inflation, potentially at the expense of immediate considerations for people’s welfare.

Looking ahead, how the CBN will navigate this dilemma remains to be seen. Furthermore, achieving the goal of elevating Nigeria to a trillion-dollar economy will require substantial efforts. Addressing the current economic challenges necessitates strategic planning, policy adjustments, and comprehensive measures to propel the nation toward its ambitious economic milestone.

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