Transportation, Construction, Food Services, Others Worst Hit As Nominal GDP Drops By N978bn

The National Bureau of Statistics on Monday released the Gross Domestic Product Report with the economy contracting by 6.10 per cent year-on-year in real terms in the second quarter of 2020.

The contraction of 6.1 per cent ended the three year trend of low but positive real growth rates recorded since the 2016 and 2017 recession.

The decline was largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.

The domestic efforts ranged from initial restrictions of human and vehicular movement implemented in only a few states to a nationwide curfew, bans on domestic and international travel, closure of schools and markets etc., affecting both local and international trade.

The efforts, led by both the Federal and State governments, evolved over the course of the quarter and persisted throughout.

 
When compared with the second quarter of 2019, which recorded a growth of 2.12 per cent, the second quarter 2020 growth rate indicates a drop of 8.22 percentage points, and a fall of 7.97 percentage points when compared to the 1.87 per cent recorded in the first quarter of 2020.

Consequently, for the first half of 2020, real GDP declined by 2.18 per cent year on year, compared with 2.11 per cent recorded in the first half of 2019.

Quarter on quarter, real GDP decreased by 5.04 per cent.

Furthermore, the NBS stated that only 13 activities recorded positive real growth compared to 30 in the preceding quarter.

In the quarter under review, aggregate GDP stood at N34.02trn in nominal terms, representing a decrease of 2.8 per cent than the N35trn recorded in the second quarter of 2019.

Overall, the NBS report stated that
the nominal growth rate was 16.81 percentage points lower than recorded in the second quarter of 2019, and 14.81 percentage points lower than recorded in the first quarter of 2020.

In the second quarter of 2020, an average daily oil production of 1.81 million barrels per day was
recorded.

This was 0.21mbpd lower than the daily average production of 2.02 mbpd recorded in the same
quarter of 2019, and 0.26 mbpd lower than the first quarter 2020 production volume of 2.07 mbpd.

The oil sector recorded a contraction of 6.63 per cent year-on-year in the second quarter 2020 indicating a decrease of 13.80 percentage
points relative to the rate recorded in the corresponding quarter of 2019.

Growth in the sector also decreased by 11.69 percentage points when compared to Q1 2020 which recorded 5.06 per cent.

Quarter-on-Quarter, the oil sector recorded a contraction of 10.82 per cent in the second quarter of 2020.

In terms of contribution, the Report stated that Oil sector contributed 8.93 per cent to total real GDP in the second quarter of this year, down
from figures recorded in the corresponding period of 2019 and the preceding quarter, where it
contributed 8.98 per cent and 9.50 per cent respectively.

For the Non-Oil sector, the NBS said it declined by 6.05 per cent in real terms during the reference quarter.

This is the
first decline in real non-oil GDP growth rate since the third quarter of 2017.

Nevertheless, the report stated that Non-Oil sector output was driven by Financial and Insurance (Financial
Institutions), Information and Communication (Telecommunications), Agriculture (Crop Production),
and Public Administration, moderating the economy-wide decline.

On the other hand, sectors which
experienced the highest negative growth according to the NBS Report included Transport and Storage, Accommodation and Food
Services, Construction, Education, Real estate and Trade among others.

In real terms, the Non-Oil sector
accounted for 91.07 per cent of aggregate GDP in the second quarter of 2020, slightly higher than the 91.02 per cent recorded in the second quarter of 2019 as well as the 90.50 per cent which it was at the first quarter of 2020.

The agricultural
sector grew by 19.90 per cent year-on-year in nominal terms in the second quarter 2020, showing an increase of 2.14 percentage points from the same quarter of 2019.

Looking at the preceding quarter’s growth rate of 22.47 per cent, this quarter’s
growth rate represented a decline of 2.57 percentage points.

The Report stated that Crop Production remained the major growth driver of
the sector, as it accounted for 87.34 per cent of nominal GDP in the sector in the second quarter of this year.

Quarter on Quarter,
it added that growth stood at 9.36 per cent in the second quarter of 2020.

Similarly, it added that Agriculture contributed 23.92 per cent to nominal GDP, higher than the rates recorded for the second quarter of
2019 and the first quarter of 2020 which recorded 19.39 per cent and 20.88 per cent respectively.

For the manufacturing sector, the Nominal GDP in the second quarter of 2020 contracted by 0.14 per cent
year-on-year.

This is 37.92 percentage points lower than figures recorded in the corresponding period of 2019.

Quarter on Quarter the sector contracted by 13.31 per cent.

The contribution of Manufacturing to nominal GDP in the
second quarter of 2020 was put at 11.79 per cent, which was higher than 11.47 per cent recorded in the corresponding period of 2019.

The NBS report also stated that construction sector’s output decreased by 3.20 per cent in nominal terms, representing a drop of 46.01 percentage points compared to the rate of 42.80 per cent recorded in the same quarter of 2019.

This represents a fall of 47.46 percentage points when compared to the rate recorded in the preceding quarter.

For the Accommodation and Food Services sector, the report stated that it fell by 30.16 per cent year on year in Q2 2020.

This represented a decline of 50.34 percentage points relative to the same quarter of 2019, when the growth rate was
20.18 per cent.

Growth was, however lower than in the preceding quarter by 43.43 percentage points when it recorded 13.27 per cent.

Quarter on quarter the sector, according to the NBS Report contracted by 62.18 per cent.

The report added that Accommodation and Food Services’ contribution to
nominal GDP stood at 0.48 per cent in the second quarter of 2020, lower than the figure recorded a year earlier,
as well as in the first quarter of 2020 recorded at 0.66 per cent and 1.21 per cent respectively.

For the Transportation sector, the NBS Report said the sector contracted by 41.63 per cent in nominal terms in the second quarter of 2020.

This rate was
lower relative to the 25.56 per cent recorded for the corresponding quarter of 2019 and the 20.44 per cent in the
previous quarter.

It added that all six activities under Transport and Storage industry recorded negative growth rates in
Q2 2020, reflecting the significant impact of restricted movements as a result of COVID-19 during the
quarter.

Quarter on Quarter the sector contracted by 59.70 per cent.

It added that Transport activities contributed 1.13 per cent to nominal
GDP in Q2 2020, a decline from the 1.88 per cent recorded in the corresponding period of 2019, and lower than
2.68 per cent recorded in first quarter of 2020.

In real terms, the Transportation and Storage sector, according to the Report contracted by 49.23 per cent in Q2 2020.