From Isaac Anumihe, Abuja
National Bureau of Statistics (NBS) yesterday, said that Nigeria’s Gross Domestic Product (GDP) grew by 5.01 per cent (year-on-year) in real terms in the second quarter of 2021.
The latest growth, it said, is third quarters of growth following the negative growth rates recorded in the second and third quarters of 2020.
The Q2 2021 growth rate was higher than the -6.10 per cent growth rate recorded in Q2 2020 and the 0.51 per cent recorded in Q1 2021 year on year, indicating the return of business and economic activity near levels seen prior to the nationwide implementation of COVID-19-related restrictions.
The steady recovery observed since the end of 2020, with the gradual return of commercial activity as well as local and international travel, accounted for the significant increase in growth performance relative to the second quarter of 2020 when nationwide restrictions took effect. Year to date, real GDP grew 2.70 per cent in 2021 compared to -2.18 per cent for the first half of 2020.
Nevertheless, quarter on quarter, real GDP grew at -0.79 per cent in Q2 2021 compared to Q1 2021, reflecting slightly slower economic activity than the preceding quarter due largely to seasonality.
In the quarter under review, aggregate GDP stood at N39,123,713.32 million in nominal terms, higher than the second quarter of 2020 with aggregate GDP of N34,023,197.60 million, indicating a year on year nominal growth rate of 14.99 per cent.
The nominal GDP growth rate in Q2 2021 was higher than -2.80 per cent growth recorded in the second quarter of 2020 when economic activities slowed sharply at the outset of the pandemic.
The Q2 2021 nominal growth rate was also higher than 12.25 per cent growth recorded in Q1 2021.
Recall that International Monetary Fund (IMF) had predicted a growth rate of 2.5 per cent for 2021 and 2.6 per cent for 2022 for Nigeria.
According to a document obtained by Daily Sun, the upgrade in 2022, depends on the expected improvements in trade and oil productions.
Also, improvements in external financial conditions is expected to increase despite the bouts of volatility.
“It (forecast) is also predicated on continued improvements in external financial conditions, which have, despite some bouts of volatility recently, have actually been fairly supportive of growth, and it’s important that that continues in order for this growth forecast to pan out.
“In terms of our forecast for Nigeria this year, we have maintained an unchanged forecast of 2.5 per cent. And we have upgraded slightly for 2022, to 2.6 per cent. The reason for the unchanged forecast for this year is because it’s a product of opposing developments. We saw activity, as elsewhere, respond a lot stronger than what we had expected earlier in the year. But looking out ahead, we think that the uptick in cases in the rest of the continent is going to pose a downside risk factor and is going to drag on growth going forward.
“In terms of our upgrade for 2022, it’s related to the improvements in terms of trade. The oil production that we expect to increase going forward, will lift growth for 2022. It is also predicated on continued improvements in external financial conditions, which have, despite some bouts of volatility recently, have actually been fairly supportive of growth, and it’s important that that continues in order for this growth forecast to pan out” IMF, said.
IMF also noted that Nigeria has always been a beneficiary of its loans and that has majorly contributed to the outlook.
“Nigeria has been a beneficiary of IMF funding. It accessed our emergency financing facilities last year, and that is also contributing to this outlook by alleviating some of the liquidity needs that the Nigerian economy has faced” it said.
As for inflations for emerging markets and developing countries, IMF said that considering
a combination of factors, including their currency weakening, it concluded that interest rates will go up and inflation would be persistent.
“What we are seeing, for several of those economies, is that because of a combination of factors, including their currency weakening, we are seeing some very high inflation readings. And several of these countries have actually started raising interest rates because of the concern that these inflation pressures could become persistent. And this is a concern. So, I would make a distinction between emerging and developing economies, and a lot of advanced economies, where again, you, in advanced economies, you watch the inflationary pressures. But in emerging and developing economies, we are seeing this show up and markets are expecting that interest rates will go up, actually, much faster than in the advanced economies” the international body, noted.