Aggregate GDP stood at N28.46 trillion in nominal terms in the first quarter of 2018, being higher when compared to the first quarter of 2017 which recorded a nominal GDP aggregate of N26.03 trillion and a positive year on year nominal growth rate of 9.36 per cent.
This rate of growth is however lower relative to growth recorded in Q1, 2017 by -7.70 per cent points at 17.06 per cent but higher than the preceding quarter by 2.14 per cent points at 7.22 per cent.
The report reflected that the oil sector contributed 9.61 per cent to total real GDP in Q1 2018, up from 8.53 per cent and 7.35 per cent recorded in the Q1 2017 and Q4 2017 respectively.
The non-oil sector grew by 0.76 per cent in real terms during the reference quarter and this is higher by 0.04 per cent point compared to the rate recorded same quarter of 2017 and 0.70 per cent point lower than the fourth quarter of 2017.
He also blamed the drop on the delay in the passage of the 2018 budget, which affected the first quarter and high interest rate, which affected the level of credit in the economy during the period.
Rewane, who spoke on a national television, said the fastest growing sectors as shown in the GDP report such as insurance, oil, financial institutions and telecommunications were not interest rate-sensitive as the contracting sector such as real estate, trade and construction, which are interest rate-sensitive.
“The Central Bank has to consider strongly whether it is time to bring down interest rate because if you don’t do that, because you are trying to attract international investors’ hot money, you will actually squeeze and choke the domestic economy out of existence,” he said.
According to Johnson Chukwu, the Managing Director of Cowry Asset Management: “This slowdown at a time when there were no major bottlenecks in the economy should also worry everyone. Bottlenecks in the sense there was enough forex liquidity, crude oil price was above $60 per barrel.
“So, maybe the issue has to do with the cost of funds and availability of credit because if this slow down continues, we may go back to recession. So, if anything happens to oil production today, we may be in a difficult position,” he added.
Expert at Vetiva Research said dip in Agriculture may show cost of insecurity.
Agriculture GDP growth came in at 3.0% y/y, the lowest quarterly real GDP growth since Q2’13. “We point to recent challenges plaguing the sector in the form of the August 2017 Benue flooding and ongoing farmer and herdsmen clashes across the Middle Belt region and believe these could be taking their toll on the sector.”
– With online reports
