GDP: Real sector reforms, oil production spike’ll spur H2 growth –Analysts
As the economic growth tanked to 2.51 per cent in the second quarter(Q2) of the year, Nigerians have been assured that the combination of reforms in the real sector and an improvement in the oil production volume will spur more growth in the second half of 2023 than witnessed in the year’s first half, analysts have predicted.
Analysts at Meristem Securities Limited in its equity reports stated this while weighing on the Q2 2023 GDP Report announced by the Nigerian Bureau of Statistics (NBS) last week, which stated that ‘the Nigerian economy grew by 2.51 per cent Year-on Year (YoY) in Q2:2023 (vs 3.54 per cent YoY in Q2:2022 and 2.31 per cent YoY in Q1:2023).’
They opined that the growth was primarily driven by an improvement in the services sector, contributing 58.42 per cent to the output growth. Among the sectors, telecommunications and information services (63 per cent) contributed the highest GDP growth during the quarter.’
On the outlook, it posits: “In the second half of 2023, we expect reforms in the real sector and an improvement in the oil production volume to spur more growth than witnessed in the year’s first half.”
In addition, in the country’s Labour Force Survey, the Nigerian Bureau of Statistics (NBS) disclosed that the unemployment rate for Q4:2022 and Q1:2023 stood at 5.30 per cent and 4.10 per cent (vs. the last reported 33.33 per cent in Q4:2020).
This significant downward adjustment is attributed to the revised methodology in accordance with the International Labour Organization (ILO) guidelines. One significant change in this new approach is expanding the working -age population to 15 years and above (as opposed to the previous range of 15 – 64 years) and the review of employment threshold to include working-age-individuals who participated in activities to produce goods or provide services for a minimum of one hour.
Furthermore, according to the Central Bank of Nigeria (CBN), Nigeria’s currency in circulation and currency outside banks dipped in July 2023 to N2.59 trillion and N2.20 trillion from N2.60 trillion and N2.26 trillion in June, respectively. This marks the first decline since the naira redesign policy in February 2023 and is attributed to the CBN’s efforts to mop up excess liquidity in the system to stabilise the naira and curb inflation. However, we do not expect this will significantly affect the inflation rate in the near term.”
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