Nigeria’s economic growth has faced a significant slowdown, with its Gross Domestic Product (GDP) growing at just 2.51% year-on-year in the second quarter of the year.
This rate is notably lower than the 3.54% recorded during the same period in 2022.
As the country grapples with challenging economic conditions, concerns are rising about the possibility of entering a recession.
The recently published GDP report by the National Bureau of Statistics (NBS) highlights the various contributing factors to this decline in economic growth.
In the second quarter of the year, the services sector emerged as the primary driver of growth, experiencing a 4.42% expansion and contributing a substantial 58.42% to the overall GDP.
Additionally, the agriculture sector displayed improved performance, with a growth rate of 1.50%, compared to 1.20% in the same quarter of 2022.
Conversely, the industry sector faced a significant setback, with a growth rate of -1.94% in the reported period, compared to -2.30% in the previous year.
In terms of their contribution to the GDP, both the agriculture and industry sectors played smaller roles in the period compared to the same period in 2022.
The aggregate GDP reached N52.1 trillion ($66.5 billion) in nominal terms, marking a notable increase from the N45 trillion ($57.6 billion) recorded in the second quarter of 2022.
This signifies a year-on-year nominal growth rate of 15.77%.
Economist Kelvin Emmanuel offers insight into the economic slowdown, stating to FORBES AFRICA: “The slowdown in the GDP growth rate to 2.51% reflects the capital squeeze resulting from various factors. Not only are foreign investments affected by a weak balance of payment position, but the government’s inability to clear outstanding FX forwards has also had an impact. Moreover, the high inflation and high-interest rate environment has reduced corporate incentives to borrow from the banking system. As capital per unit of labor decreases and employment growth stagnates, the GDP growth rate is inevitably impacted.”
Emmanuel further raises concerns, saying, “Nigeria has now reported a GDP growth rate lower than its population growth rate of 3% for two consecutive quarters. If this trend persists into Q3, the nation’s economy could officially enter a recession, signifying the need for immediate corrective measures.”