SUMMARY ON NIGERIA’s ECONOMIC PERFORMANCE Q3, 2021

In 2020, Nigeria experienced its deepest recession in two decades, but growth resumed in 2021 as pandemic restrictions were eased, oil prices recovered, and the authorities implemented policies to counter the economic shock.

Nigeria was highly vulnerable to the global economic disruption caused by COVID-19, particularly due to the decline in oil prices. Oil accounts for over 80 percent of exports, a third of banking sector credit, and half of government revenues.

The non-oil sector is a significant contributor to the economic performance in Q2, 2021 with growth of 6.74 per cent in real terms. The contribution of the non-oil sector to GDP increased from 91.07 per cent in Q2, 2020 to 92.58 per cent in Q2, 2021. The main drivers of the Q2, 2021 economic growth include Trade, Information and Communication (mainly Telecommunications), Transportation, Electricity, Agriculture (Crop Production) and Manufacturing. The service sector, specifically, recorded its strongest performance in more than a decade, growing at 9.27 per cent.

The Nigerian economy was expected to grow by 2.6 per cent in the second quarter of this year. And that the GDP growth data coupled with falling inflation could lead to the Monetary Policy Committee (MPC) leaving its interest rates unchanged at its September meeting. Other experts also said that with less than 570 days to the 2023 elections, an assessment of the Federal Government’s scorecard, with respect to achieving its broad macroeconomic goals, revealed “under-performance” amid half-hearted and belated efforts at economic reform.

“While reforms have not been helped by the COVID-induced disruption and delays in implementation, fears are rife that the government may be switching gears firmly into campaign mode as the elections draw ever closer.”

According to a United Nations analyst FDC, the short-term outlook for the Nigerian economy is benign on most fronts. Output will benefit from the base effects of the slump in 2020, increased vaccinations and higher oil prices and production.

Nigeria’s annual inflation rate eased for the sixth straight month to 16.63% in September of 2021, down from 17.01% in August. It was the lowest rate since January, largely due to a sustained moderation in food inflation since April (19.57% vs 20.3% in August) and despite the naira’s ongoing depreciation. The annual core inflation rate, which excludes the prices of agricultural produce, rose to 13.74% in September from 13.41% in the prior month. On a monthly basis, consumer prices increased by 1.15%, following a 1.02% rise in the previous month.

SUMMARY ON NIGERIA’s ECONOMIC PERFORMANCE Q3, 2021