Covid-19 Hurricane Makes Landfall as GDP Contracts 6.1% YoY in Q2 2020
Nigeria’s GDP contracted by 6.10% YoY in Q2 2020 compared to 1.87% YoY growth in Q1 2020
Services and Oil sector GDP posted declines of 2.6% and 6.6% YoY respectively in Q2.
The oil sector contraction suggests crude oil production averaged 1.81mbpd in Q2 20, lower than average of 2.07mbpd in Q1 20 and 2.02mbpd in Q2 19.
Compared to the spate of contraction in GDP in advanced economies in the first quarter of 2020, due to Covid-19 associated lockdowns, the Nigeria Q1 2020 GDP only showed moderate deceleration. However, the Q2 2020 GDP figures released this morning, showed the impact of the Covid-19 associated disruption in economic activities. Overall GDP in Q2 2020 contracted by 6.10% YoY (just below our forecast of 6.58%) and contracted 5.04% QoQ following contraction in both oil and non-oil sectors. While the headline GDP contraction came in lower than our forecast, following much slower rate of contraction in manufacturing, and crude oil, we are however surprised about the level of contraction in construction and trade. Relative to forecast of 10% YoY and 15% YoY contraction in construction and trade, the Q2 numbers delivered a much deeper contraction of 31.8% and 16.6% respectively. On an attribution basis, Wholesale and retail trades contributed 2.67% to overall decline in Q2, followed by construction (1.41%), services (0.99%), manufacturing (0.80%) and crude oil (0.60%). On balance, Nigeria posted 2.18% YoY GDP contraction in H1 2020 compared to 2.11% growth in H1 19. Services and agriculture composition to GDP improved to 38.7% and 23.2% from 37.7% and 22.3% in H1 2019 respectively.
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