The National Bureau of Statistics (NBS) recently published the 2nd Quarter (Q2) 2021 Gross Domestic Product (GDP) estimates which measure economic growth.
During the quarter, Nigeria’s Gross Domestic Product (GDP) grew by 5.01%(year-on-year) in real terms, resulting in the third consecutive quarter of growth since last year’s slowdown. This is the strongest real GDP growth the exonomy has recorded since Q4 2014.
The 2021 Q2 growth rate reflects much better economic performance compared to the same period last year, which recorded -6.10% growth rate. Furthermore, it was also better than the previous quarter (Q1) growth rate of 0.51%, on a year-on-year basis. Year to date, real GDP grew 2.70% in 2021 compared to -2.18% for the first half of 2020.
Broadly speaking, the Services sector recorded a strong performance growing at 9.27% during the quarter representing the fastest growth in the services sector since 2010.
Growth in Q2 2021 would have been much stronger had it not been for Agriculture recording slower growth at 1.30% due to several bottlenecks currently negatively affecting the sector and due to the Industrial sector contracting by -1.23% largely due to the over 12% contraction in Crude Oil and Natural Gas Production.
Nevertheless, the non-oil sector was a major driver of growth during the quarter, recording a growth rate of nearly 7% which represents the fastest growth in the non oil sector since Q3 2014.
Specific activities which recorded growth during the quarter include: Trade, Transportation, Coal mining, Metal ores, as well as Insurance, each of which recorded double digit growth. The report, however, also indicates that some activities such as Oil refining, Crude petroleum and natural gas production as well as financial services recorded negative quarterly growth. Overall, a total of 42 out of 46 economic activities expanded during the quarter compared to only 13 at the same time last year, while 37 activities performed better than they did last quarter (Q1).
These figures indicate that business and commercial activities are fully returning to pre-pandemic levels as restrictions to movement, business activities, as well as domestic and international travel have been relaxed.
When these estimates are considered along with declining inflation rate which slowed from 18.17% at the end of Q1 to 17.75% at the end of Q2 and as at July, stands at 17.38%, it is clear that the economic recovery is gradually picking up steam. With favourable international economic conditions expected as economic activities and normalcy returns across major economies, and local conditions continue to improve to allow business activities, the Nigerian economy is expected to maintain a steady path to more inclusive growth.