Saturday, 26 August 2023 04:58

Nigeria’s economy performs below forecasts as GDP growth slows to 2.5%

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Nigeria’s economy grew at a slower-than-expected pace after the oil sector contracted for a 13th straight quarter, adding to the list of issues President Bola Tinubu needs to address.

Gross domestic product in the continent’s biggest oil producer expanded 2.5% in the three months through June from a year earlier, compared with 2.3% in the prior quarter, the statistics agency said Friday. That undershot a median estimate for growth of 2.8% in a Bloomberg survey of five economists.

The yield on the nation’s dollar bonds due 2032 stayed seven basis points higher on the day at 11.07%.

The 3.58% growth in the non-oil sector in the second quarter from a year earlier was offset by a contraction in the oil sector. The industry contracted 13% as production decreased to 1.2 million barrels per day. That compared with 1.5 million barrels per day from a year earlier.

Nigeria has been trying to ramp up production to reach its full OPEC+ quota but has been beset by ongoing supply disruptions, theft and pipeline vandalism.

Growth is also likely to be crimped in the next quarter by Tinubu’s decision to remove fuel subsidies on May 29 and ease exchange controls a few days later, which has led to the naira losing 40% of its value against the dollar and sent prices soaring. Annual inflation quickened to a fresh 18-year highof 24.1% in July.

Last week Tinubu partially walked back those reforms when he suspendedincreases in gasoline prices.



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