Business

Nigeria economy grows with bump in oil production

Wednesday, May 23, 2018

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ABUJA, Nigeria (AFP) — Nigeria's economy grew slower than expected in the first quarter, official statistics showed Monday, with an expansion in oil production offset by a sputtering non-oil sector.

The economy grew by 1.9 per cent year-on-year in the three months to March, compared with growth of 2.1 per cent in the fourth quarter of 2017, said Nigeria's National Bureau of Statistics.

Nigeria's oil production — which generates the bulk of the country's government revenue — is up to 2.0 million barrels per day, the highest level in over a year according to the statistics bureau.

But growth in the non-oil sector was a meagre 0.8 per cent despite slowing inflation and higher oil prices, surprising analysts who predicted stronger growth.

“It's a bit of a depressing result,” said John Ashbourne of London-based Capital Economics to AFP.

“Consumer spending is incredibly weak. Nigerian consumers are holding back, either because incomes have fallen more than we thought or because people are worried about the future,” Ashbourne said.

Nigeria's President Muhammadu Buhari has worked to try and pivot the economy away from its dependence on oil, a Herculean task in a country that is overreliant on the sector.

Last week, Nigeria's Parliament passed a record 9.12-trillion-naira (US$29.8-billion) budget designed to bump growth ahead of presidential polls in 2019.

On Tuesday, the central bank will announce its decision on interest rates, with lower inflation in recent months making room for a cut in borrowing costs.

The bank has kept its key rate at 14 per cent since 2016 in a bid to quell inflation and prop up the naira.

Nigeria's outlook is still positive, as the economy gains momentum after exiting its first recession in two decades last year.

The economy is expected to get a boost from higher oil prices, lower inflation, and implementation of the 2018 budget.

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