The National Bureau of Statistics (NBS) has expressed that Gross Domestic Product (GDP) performance of Nigeria economy in third (Q3 2020) reflected residual effects of the restrictions to movement and economic activity over the response to the COVID-19 pandemic.
Nigeria for the second quarter reported contracted GDP performance, which translates into recession.
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock).
The Nigerian GDP report for Q3 2020 recorded a growth rate of –3.62per cent (year-on-year) in real terms in the third quarter of 2020.
The report by NBS on Saturday showed that the economy has contracted by -2.48per cent.
According to the report, “While this represents an improvement of 2.48per cent points over the –6.10 per cent growth rate recorded in the preceding quarter (Q2 2020), it also indicates that two consecutive quarters of negative growth have been recorded in 2020.
“Furthermore, growth in Q3 2020 was slower by 5.90 per cent points when compared to the third quarter of 2019 which recorded a real growth rate of 2.28 per cent year on year.
“As these restrictions were lifted, businesses re-opened and international travel and trading activities resumed, some economic activities have returned to positive growth.
“A total of 18 economic activities recorded positive growth in Q3 2020, compared to 13 activities in Q2 2020.”
The report noted that in Q3 2020, aggregate GDP stood at N39.1trillion in nominal terms.
“This performance was 3.39per cent higher when compared to the third quarter of 2019 which recorded an aggregate of N37.81trillion.
“This rate was, however, lower relative to growth recorded in the third quarter of 2019 by –9.91per cent points but higher than the proceeding quarter by 6.19per cent points.”
For clarity, the Nigerian economy has been broadly classified into the oil and non-oil sectors
Oil sector performance
The average daily oil production recorded in the third quarter of 2020 stood at 1.67 million barrels per day (mbpd), or 0.37mbpd lower than the average production recorded in the same quarter of 2019 and 0.14mbpd lower than production volume recorded in the second quarter of 2020
Real growth for the oil sector was –13.89per cent (year-on-year) in Q3 2020, indicating a sharp contraction of –20.38per cent points relative to the rate recorded in the corresponding quarter of 2019.
Furthermore, real oil growth decreased by –7.26per cent points when compared with oil sector growth recorded in Q2 2020 (6.63per cent). Quarter on quarter.
However, the oil sector recorded a growth rate of 9.64% in Q3 2020. The sector contributed 8.73per cent to total real GDP in Q3 2020, down from 9.77per cent and 8.93per cent respectively recorded in the corresponding period of 2019 and the preceding quarter, Q2 2020.
The Non-Oil Sector performance
The non-oil sector grew by –2.51per cent in real terms during the reference quarter, which is –4.36per cent points lower than the rate recorded in Q3 2019 but 3.54per cent points higher than in the second quarter of 2020.
The non-oil sector was driven mainly by Information and Communication (Telecommunications), with other drivers being Agriculture (Crop Production), Construction, Financial and Insurance (Financial Institutions), and Public Administration.
In real terms, the non-oil sector contributed 91.27per cent to the nation’s GDP in the third quarter of 2020, higher than its share in the third quarter of 2019 (90.23per cent ) and the second quarter of 2020 (91.07per cent).