13 March 2018

Nigeria: Oil Production to Contribute 2% Growth to Nigeria's GDP in 2018 - PWC

PricewaterhouseCoopers, PwC, Nigeria said that Nigeria's real Gross Domestic Product, GDP, will grow at 2.0 per cent year-on-year in 2018, propelled by oil production increase and government spending.

The multinational professional services firm in its latest economic report said significantly higher oil sector growth in the first quarter of 2018 due to base effects is expected. Also expected is increased government and pre-election spending to boost the weak consumer spending.

"However, we note that growth may be offset by a slowdown in investments due to the uncertainty usually associated with elections in Nigeria.

"Despite our expectation of stronger growth in 2018, we believe the prolonged delay in implementing overdue reforms in the economy will continue to drag growth. These include: slow progress with the power sector reforms, absence of full deregulation of the downstream petroleum sector and the multiplicity of exchange rates which constrains investments and makes the economy vulnerable to shocks in the oil sector. Hence, growth will remain considerably below the long-term economic and population growth rates of 6.7 per cent and 2.7 per cent respectively."

PwC also stated that it is equally impressed by the growth rate recorded in the non-oil sector in 2017. It stated that Nigeria's economy consolidated its on-going recovery in fourth quarter of 2017, as real GDP expanded by 1.9 per cent year-on-year, the highest quarterly growth since fourth quarter of 2015.

"This was driven by the non-oil sector which rose 1.3 per cent year-on-year, the highest in eight quarters, reflecting strong improvements in the agriculture, manufacturing and services sectors (92.6 per cent of GDP)."

Meanwhile, the oil sector received a boost from 150,000 barrels per day increase in oil production to 1.9 million bpd, expanding 8.3 per cent year-on-year. In full year terms, real GDP increased 0.8 per cent year-on-year in 2017, largely in line with our estimate of 0.7 per cent year-on-year.

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