GDP to settle at 3.2% in 2024

Economic momentum gathered pace in the penultimate quarter of the year, with GDP scaling by 3.5% YoY (vs 3.2% in Q2'24), slightly lower than our estimate of 3.6% and materially higher than Bloomberg's consensus estimates of 2.9%. The non-oil sector settled at 3.8% YoY (vs 2.8% YoY in the prior quarter), while the oil sector delivered a growth rate of 5.2% YoY (vs 10.2% in Q2'24). 

The outturn in the non-oil sector profited from an uptick in services following recovery in the transport sector. In addition, the sustained rate hike by the CBN supported core banking activities, with a positive passthrough to the finance and insurance sectors. Elsewhere, despite the 24.3% YoY decline in telecommunication subscriber growth, the ICT sector expanded by 5.9% (vs 4.4% in Q2'24), possibly linked to increased average data consumption per user.

Meanwhile, the agricultural sector remained less impressive, hampered by incessant insecurity, poor crop yield and low mechanisation. Flooding in states like Borno, Benue and Niger following the collapse of the Alau dam added another layer of pressure on agro output, destroying over 700,000 hectares of farmland and threatening food security in Nigeria.  

In the same vein, the manufacturing sector continued its unimpressive run, growing modestly by 0.9% YoY vs 1.3% in Q2'24, on the back of a volatile exchange rate and a high-interest rate environment.

Overall, we estimate that the service sector will remain the cornerstone of GDP growth, underpinning our FY'24E of 3.2% vs 2.7% in 2023.

CardinalStone Research 

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