GDP drops in 2015 as falling oil prices persist
The Gross Domestic Product, GDP, of the Nigerian economy has taken a downward slope in 2015 compared to economic growth in previous years, the National Bureau of Statistics, NBS, has said.
The bureau in its latest analysis of the Nigerian economy over 2010 through 2015 shows that the growth rates in each quarter of 2015 were consistently lower than the corresponding quarters of 2014.
In the third quarter of 2015, the GDP growth rate was 2.84% and forecasted as 2.78% in the fourth quarter which was 3.38% points and 3.16% points lower than its corresponding quarters of 2014 which stood at 6.23% and 5.94%, respectively.
Further analysis show that the growth rate in Q4 of 2015 is 0.07% points lower than Q3 of the same year implying a drop both in the year on year and quarter on quarter performance of the economy.
Constant drop in crude oil prices was said to be responsible for this sluggish growth, since the product constitutes the major source of income for the government.
The report also identified dominance of political activities in 2015 due to the general elections, shocks in the domestic supply of refined petroleum products, insurgency in the northeast and the pressure/restrictions on foreign exchange transactions in the later part of 2015 bearing in mind that Nigeria imports a considerable amount of goods both through formal and informal channels, factors responsible for this decline.
In Q1, Q2, Q3 and Q4 of 2015 growth rates were recorded of 3.96%, 2.35%, 2.84% and 2.78%, respectively lower by 1.29% points, 3.25% points, 2.30% points and 2.48% points when compared to the 2011 – 2014 averages of each corresponding quarter, which stood at 5.25%, 5.60%, 5.14% and 5.26% respectively.
On sector by sector bases, the agric sector was said to have witnessed slowed growth after the previous highs recorded in 2012, partially as a result of security challenges in the North East.
In 2015 in particular, growth slowed, declining by 1.21% in Q2 from 4.70% recorded in the Q1 of 2015. Growth remained relatively stable in Q2, Q3 and Q4 at 3.49%, 3.46% and 3.48% respectively.
This was however lower when compared with quarterly growth recorded in 2014 at 5.53%, 3.68%, 4.47% and 3.64% respectively. Compounding on slow growth in the sector is the lack of efficient transportation and storage of materials leading to substantive losses in output.
Meanwhile, the industrial sector slowed significantly in reference to growth recorded in the four quarters of 2015 which stood at -2.53%,-3.31%, -0.13% and -1.14% showing a year on year decline relative to growth recorded in 2014 which stood at 4.84%, 8.97%, 5.43% and 7.96% respectively.
The sharp drop in the price of oil from an average price of $110 per barrel from 2010 till 2014 to below $40 per barrel in the last quarter of 2015 has grossly affected this sector’s yield.
The drop in price is mainly due to the increasing production of the United States and the firm stand of Organization of Petroleum Exporting Countries not to cut production.
The manufacturing sector had a challenging 2015 with the problems of insecurity, poor conditions of infrastructure, the uncertainty of the elections which slowed investment and in the last quarter; challenges in accessing foreign exchange.
The service sector also recorded slower growth in 2015 relative to 2014. Through the first three quarters of 2015, growth was recorded at 7.04%, 4.67%, and 3.97% respectively.
Compared to the growth rates recorded in 2014, growth was slower by 0.15% points, 1.87points and 3.64% points. As electricity output slowed for the most part during the year, companies had to rely on alternate sources of energy.
Also, slower consumption from households as a result of tight household budgets weighed on growth, resulting in slower trade, telecommunications, financial services, and real estate output.