Nigeria’s economic growth slowed in last quarter of 2022

Nigeria’s economic growth slowed to 3.52% in the fourth quarter from 3.98% a year earlier, as widespread flooding destroyed farms, oil production declined and industry was squeezed by rising costs, the statistics office said.

Double-digit inflation and a weaker naira currency have held back Africa’s biggest economy as it has recovered from the COVID-19 pandemic.

Nigeria holds elections on Saturday, which President Muhammadu Buhari is constitutionally-barred from contesting, at which tepid growth is expected to be a key factor.

– A key point to note

Nigeria has now registered growth for nine consecutive quarters, after exiting a recession in 2020. The National Bureau of Statistics (NBS) said full-year growth stood at 3.1% in 2022, in line with the World Bank’s projection.

“Although the agriculture sector grew … its performance was significantly hampered by severe incidences of flood experienced across the country,” the NBS said.

“The Industry sector was … challenged recording -0.94% growth and contributing less to the aggregate GDP relative to the third quarter of 2022 and the fourth quarter of 2021.”

– How does this affect you?

If an economy is growing, each quarterly GDP will be slightly bigger than the previous quarter. That would indicate that people are doing more work and getting a little bit richer.

Most economists, politicians and businesses like to see GDP rising steadily because rising GDP usually means people spend more, more jobs are created, more tax is paid and workers get better pay rises.

If GDP is falling, then the economy is shrinking. It is bad news for businesses and workers. If GDP falls for two quarters in a row, that is known as a recession, which can mean pay freezes and lost jobs.

In Nigeria’s latest case, the economy still grew in the last quarter of 2022 only that it grew at a slower rate. It is not that much of good news.

– Learn more

The price of diesel, which many businesses rely on to generate electricity, has soared in Nigeria due to high global oil prices, leading to increased costs of production, while a weaker currency has made imports more expensive.

Nigeria, Africa’s top oil producer, recorded an average daily oil output of 1.34 million barrels per day (mbpd) in the fourth quarter, lower than the daily average of 1.50 mbpd registered in the same quarter of 2021, the NBS said.

Oil production, which accounts for around two-thirds of government revenue and 90% of its foreign exchange reserves, contracted 13.38% year-on-year in the fourth quarter, the NBS said.

Nigeria’s central bank launched a monetary policy tightening cycle last May to counter inflation that hit its highest since 2005. The bank has so far hiked rates by 600 basis points.

Source: Reuters