The Group Managing Director and CEO, Cowry Asset Management Group, Johnson Chukwu, has disclosed that growth in Nigeria’s economy will remain subdued in the second half of the fiscal year ending December 31, 2024.
Nigeria’s growth, he said, is seen to remain subdued in the near term as the combined effects of heightened insecurity, infrastructural deficit, particularly energy, high interest cost, volatile exchange rates and low consumer demand will continue to constrain productivity in the economy, in the near future.
Chukwu made the disclosure during the quarterly economic review and outlook webinar in Lagos, recently.
The economic review for the first half of 2024 saw the country experiencing some lull just as the pace of growth was rather sluggish.
He observed that Nigeria’s economy decelerated its growth rate to 2.98 percent in real terms in Q1 2024, down from Q4 2023 rate of 3.46 percent but higher than Q1 2023 growth rate of 2.31 percent.
“This marks the 14th consecutive quarter of economic expansion since the exiting recession in 2020. Q1 2024 economic performance was driven by growth recorded by the services sector, which grew by 4.32% and contributed 58.04% of the GDP. Nigeria’s economic performance was dampened by sluggish performance in the agriculture sector, which accounted for 21% of the GDP but grew by only 0.18% in Q1 2024 on the back of security challenges,” he said.
According to him, “The oil sector grew by 5.70 percent year on year in Q1 2024, down from 12.11 percent in Q4 2023. On a quarter-on-quarter basis, it recorded a growth rate of 13.77 percent, contributing 6.38 percent to the total real GDP in Q1 2024, up from Q1 2023 and Q4 2023 levels. The non-oil sector grew by 2.80 percent in real terms, driven by Financial and Insurance services, Information and Communication, Trade, and Manufacturing. This growth was slightly higher than Q1 2023 but lower than Q4 2023. “The services sector grew by 4.32% and contributed 58.04% to the aggregate GDP, led by strong activities in finance and insurance, information and communication, and Fintech investments. The agriculture sector grew marginally by 0.18%, though a recovery from a decline of -0.90% in Q1 2023. However, its contribution to GDP decreased compared to Q1 2023 and Q4 2023.”
The industry sector grew by 2.19 percent, up from 0.31 percent in Q1 2023, propelled by manufacturing, water supply, construction, trade, and entertainment sectors.
Interestingly, capital importation into Nigeria saw a remarkable increase of 198.06 percent year on year, reaching $3.376billion in the first quarter of 2024, up from $1.13 billion in the same period of 2023. This also indicates a 210.16 percent quarter on quarter rise from $1.09 billion in the last quarter of 2023. This is the highest inflow recorded since the pandemic era ($5.85 billion in Q1 2020).
“Portfolio Investment ranked highest with $2.08 billion, accounting for 61.48% of the total capital inflow during the period. Investors took advantage of the high-interest rate environment, with investment of $1.61 billion in money market instruments and $420.8 million in bonds became the attractive offer of Treasury Bills at coupons as high as 21.49% in March 2024.”
In its World Economic Outlook report released recently, The International Monetary Fund cut its forecast for Nigeria’s economic growth in 2024 to 3.1 percent.
The IMF cited a weaker growth recorded in the first quarter of the year, Q1 ’24 as reason for the new forecast.
The downgrade represents 0.2 percentage points below the earlier forecast of 3.3 percent.
The downgrade followed weaker-than-expected Gross Domestic Product, GDP, and growth recorded by the country in Q1’23.
The IMF however retained its 3.0 per cent forecast for Nigeria’s economic growth in 2025.
