Real gross domestic product (GDP) growth has been projected to hit 3.25 per cent this year. According to Cowry Asset Management Limited, the outlook is shaped by a complex interplay of domestic and global economic factors.
“Pertinently, aggressive rate hikes by the central bank in response to escalating inflation, concurrently with fluctuating but upward-trending employment figures, dwindling daily crude oil production and escalating debt levels, collectively contribute to Nigeria’s economic challenges.
It noted that Nigeria’s economic growth would remain robust with positive upsides despite several headwinds, which come on the back of insecurity challenges, a high inflation rate and a sluggish pace of economic activities.
It also pointed out that the country’s economic growth would remain subdued in the near term as current performance paints a nuance that the actual performance will depend on a complex of domestic and global economic factors.
“As noted in our 2024 outlook, we anticipate a higher real GDP growth than in 2023, with expectations of accelerated growth in the oil sector, aligned with the recovery in crude oil production.
“Additionally, the normalisation and permeation of new government reforms and policies are expected to propel growth in the non-oil sector, particularly supported by the services sector,” it stated.
Overall, Cowry Research projected a 3.25 per cent year-on-year real GDP growth in 2024.
It pointed out that the latest GDP data by the National Bureau of Statistics (NBS) showed that Nigeria’s economy posted robust gross domestic output growth of 2.98 per cent to N18.28 trillion in real terms in the first quarter of 2024, which is slightly lower than the 3.46 per cent growth reported in the fourth quarter last year, but higher than the 2.31 per cent recorded in the corresponding quarter of 2023.
The growth marks the 14th consecutive quarter of economic expansion and at a solid pace since exiting the recession in 2020 following the effect of the pandemic.
“The positive output growth was underpinned by the non-oil sector which grew by 2.8 per cent in real terms during the reference quarter (Q1 2024). This rate was higher by 0.02 per cent points compared to the rate recorded in the same quarter of 2023 and 0.28 per cent points lower than the fourth quarter of 2023.
“This sector was driven in the first quarter of 2024 mainly by financial and insurance (financial institutions); information and communication (telecommunications); agriculture (crop production), trade and manufacturing (food, beverage and tobacco), accounting for positive GDP growth,” it stated.
Consequently, the services sector, which recorded a growth of 4.32 per cent and contributed 58.04 percent to the aggregate GDP led the growth momentum.
The performance of the service sector comes from strong activities in the finance and insurance sector, information and communication as was driven by improvement in financial services offerings, development in the technology space as well as investments into finance and technology companies (fintechs) to drive services offerings.
In terms of share of the GDP, the services sector contributed more to the aggregate GDP in the first quarter of 2024 compared to the corresponding quarter of 2023.
