Manufacturing sector recovers, oil output sustains momentum… takeaways from 2021 Q1 GDP report

Output from oil production sustained growth momentum in the first quarter of 2021 as the manufacturing sector recovered from the COVID-19 headwinds.

According to figures released by the National Bureau of Statistics (NBS), the nation’s economy  increased by 0.51 percent in the first quarter of 2021 from 0.11 percent recorded in the fourth quarter of 2020. This implies second consecutive quarter growth since the nation fell into recession in the third quarter of 2020.

Here are key takeaways from the latest report:

Non-oil sector accounts for 90.75 percent of Nigeria’s economy

According to the report, the non-oil sector accounted for 90.75 percent of aggregate GDP in the first quarter of 2021, higher than its share in the first quarter of 2020, which was 90.50 percent, but lower than 94.13 percent recorded in the fourth quarter of 2020.

The manufacturing production increased for the first time since last year. It grew by 3.4%, leading overall growth of the non-oil sector by 0.79 percent in Q1 2021. This is a positive growth after three consecutive quarters of decline.

Apart from the manufacturing sector, telecoms, crop production, real estate, and construction lifted growth in the quarter.

The telecoms sub-sector recorded 7.69 percent – albeit at a slow rate, to push the information and communication sector to a growth rate of 6.47 percent — first single-digit growth since the first quarter (Q1) 2020.

During the COVID-19-induced economic recession, the telecoms sector was one of the most resilient sectors — but hampered by the government restriction regulations on sim card sales in Q1.

Real Estate sector grew by 1.77 percent in Q1 2021 from a negative growth of 4.75 percent in Q1 2020.

Construction sector grew by 1.42 percent in the first quarter of 2021 from 1.21 percent recorded in Q4 2020 and 1.69 percent in Q1 2020.

Oil sector contributes 9.25 percent to the country’s economy

On the other hand, oil production rose to 1.72 million barrels per day in the first quarter from 1.56 million in the last quarter of 2020. This is lower than the average daily production of 2.07mbpd prior coronavirus pandemic period.

Oil GDP contracted by 2.21 percent in the first quarter, lower than 5.06 percent growth recorded in the corresponding quarter of 2020. Quarter-on-quarter basis, growth in Q1 2021 was higher by 17.55 percent points, recording a growth rate of 35.65 percent compared to Q4 2020.

The sector accounted for 9.25 percent of aggregate real GDP in Q1 2021, slightly lower than 9.5 percent recorded in the corresponding period of 2020 but higher than in the preceding quarter, where it contributed 5.87 percent.

Based on the Q1 report, economists at Cordros Securities forecast growth to settle at 3.37 percent in the second quarter of 2021.