Nigeria: GDP growth ticks up in the second quarter
GDP growth accelerated to 2.5% year on year in the second quarter from 2.3% in the first quarter, as the country recovered from a cash crunch that occurred in Q1.
Growth in the non-oil sector of the economy accelerated to 3.6% year on year in Q2 (Q1: +2.8%). The services sector grew 4.4% annually in the second quarter, picking up from the first quarter’s 3.2% increase. In addition, the agricultural sector strengthened, expanding 1.5% in Q2 (Q1:+0.9% yoy). On the flip side, the industrial sector contracted 10.2% in Q2, marking the worst result since Q2 2020 (Q1: +0.3% yoy).
Meanwhile, the oil sector shrank at a sharper annual rate of 13.4% in Q2 (Q1:-4.2%). Oil production fell to 1.23 million barrels per day (mbpd) in Q2 from 1.35 mbpd in the previous quarter.
The economy is seen accelerating slightly in H2, but the outlook remains uncertain. President Tinubu kicked off his tenure in June with drastic reforms—the removal of costly fuel subsidies and the liberalization of the FX regime. These measures spurred inflationary pressures in June and July, exacerbating the cost-of-living crisis, but they also strengthened investor sentiment and bode well for financial stability going forward. The government’s commitment to these reforms is the key factor to watch in the coming months.