Outline:

• Global Growth Across Selected Economies
• Nigeria GDP Growth
• Key highlights in Q2 2024
• Key Highlights in H1 2024
• GDP Growth Performance by Sectors in Q2 2024
• GDP Growth Performance by Activities in Q2 2024
• Closing Thoughts: Outlook for H2 2024 

Global Growth Across Selected Economies

Growth remained fragile in global economies as global central banks maintained hawkish interest rates to curb inflationary pressures in H1 2024. Conditions in the global economy, such as geoeconomic tensions/wars, energy crisis, gradually changing world order/fragmentation and currency/financial market uncertainties, continued to pose risks to global growth. However, as inflationary pressures moderated and conditions increasingly tilted towards rate cuts, growth across several economies gained marginal momentum, while in others, growth conditions remained pallid (see Chart 1 below).

Chart 1:

While faced with uncertainties from the global economy, the growth tale in African economies was confronted with domestic economic growth challenges. Notably, inflationary pressures constrained consumption activities, currency crises, growing debt-to-GDP conditions, and declining revenue-to-GDP conditions stood among the major bottlenecks confronting African economies in Q2 2024 (see Chart 2 below).

Chart 2:

Nigeria GDP Growth in Q2 2024

The National Bureau of Statistics (NBS) data revealed a resilient growth performance by the Nigerian economy. According to the statistics bureau, Nigeria’s real GDP growth rose to 3.19% in Q2 2024 from 1.51% in Q2 2023 (see Chart 3 below).

Chart 3:

Highlights from Q2 2024 GDP Performance

• Nigeria’s Gross Domestic Product (GDP) grew by 3.19% in Q2 2024 from 2.51% in Q2 2023. 
• Real (Nominal) GDP value stood at N18.29trn (60.93trn) in Q2 2024 from N17.72trn (N52.10trn) in Q2 2023.
• The agriculture (22.61%), ICT (19.78%), and Trade (16.39%) sectors contributed the largest amounts to GDP growth in Q2 2024.
• The financial and insurance (28.79%), mining and quarrying (7.79%), and ICT (4.44%) sectors were among the largest growth sectors.
• Crop production (20.35%), Trade (16.39%), and Telecommunication (16.36%) activities contributed the largest amounts to GDP growth in Q2 2024.
• The growth in Q2 2024 was driven by a 94.30% non-oil sector contribution to GDP; however, the sector growth stood at 2.80% (3.52%) in Q2 2024 (Q2 2023).
• Oil sector contribution to GDP in Q2 2024 (Q2 2023) stood at 5.70% (5.34%), while its growth surged by 10.15% (-13.43%) in Q2 2024 (Q2 2023).
• The agriculture sector had a real growth rate of 1.41% with 22.61% contribution to the GDP in Q2 2024 from 23.01% in Q2 2023.
• The industrial sector had a real growth rate of 3.53% with 18.62% contribution to the GDP in Q2 2024 to the GDP from 18.56% in Q2 2023.
• The services sector had a 3.79% real growth rate with a 58.76% contribution to the GDP in Q2 2024 from 58.42% in Q2 2023.

GDP Growth Performance by Sectors in Q2 2024 

While faced with significant disruptions affecting its output, including security, weather conditions, and logistics issues, the agriculture sector continues to make the most important contribution to GDP growth in Nigeria. Notably, nine of the ten top sectors experienced a decline in contribution to GDP in Q2 2024 amidst monetary policy tightening conditions, inflationary pressures, and the weakening of the naira (see Chart 4 below).

Chart 4: 

• Agriculture contribution dipped by -174% to 22.61% in Q2 2024 from 23.01 as there has been a disruption in the supply chain, especially for crop production.
• Mining and Quarrying grew by 4.48%, making it the only sector that improved in contribution year-on-year
• Other sectors also declined despite being contributors to GDP. This shows that the macroeconomic activities affected significant sectors of the economy.

In Q2 2024, some leading contributing sectors exhibited slower growth rates. This implies that while their contribution to GDP remains significant, their growth percentage is relatively low. A primary sector's substantial impact on GDP does not guarantee robust growth (see Chart 5 below). 

Chart 5:

• Financial and Insurance maintained its rank in Q2 2024 with a growth of 7.27% to 28.79% in Q2 2024.
• Mining and Quarrying, appearing new on the list, had a growth of 7.79% in Q2 2024
• Sectors like Construction, Professional Services, Trade and Manufacturing fell from the list in Q2 2024. This shows the declining rate of this important sector of the economy. These issues arose from high input and borrowing costs, not allowing for expansion.  
• Positively, Education made it to the top list in Q2 2024, showing improvement and expansion of this sector.

GDP Growth Performance by Activities in Q2 2024

Although some activities did not rank among the top 10 in growth, certain activities still made notable contributions to GDP growth. Analysts have observed that while some leading activities have experienced a decline, they continue to maintain high rankings despite showing signs of no improvement (see Chart 6 below).

Chart 6:

• Crop production activities decreased amidst insecurity and high input costs in Q2 2024.
• Constrained consumer demand saw trade activities contribute to GDP in Q2 2024.
• High global oil prices, amidst geopolitical tensions, supported crude petroleum and natural gas activity's contribution to GDP in Q2 2024. 

The increased inflow of investments in the development of the mining, solid minerals, and rail sector activities drove growth in these sectors. Overall growth rates across top growth activities were below growth performance in Q2 2023 (see Chart 7 below).

Chart 7:

• Metal ores growth declined to 58.12% in Q22024 from 65.56% in Q2 2023.
• Infrastructural improvements drove growth in rail transport and water transport activities.

Closing Thoughts: Outlook for H2 2024

Nigeria’s growth in Q2 2024 is noted to have sprinted ahead of bottlenecks confronting the economy. While having weak growth due to the challenging macroeconomic and socio-political factors, contributions from key growth sectors of the economy, such as agriculture, finance, trade, ICT, and manufacturing, supported Nigeria's growth leap to 3.14% in Q2 2024 from 2.98% in Q1 2024 and 1.51% in Q2 2023.

Proshare analysts believe that the direction of growth in Q2 2024 is desirable. However, households and businesses face significant challenges, including elevated inflation, cost pressures, depreciating naira, and high energy costs. These factors create bottlenecks that hinder the effective transmission of marginal growth benefits into improved household welfare and quality of life. Consequently, Nigeria’s GDP growth may remain constrained, as diminished consumer well-being and impeded investment spending could continue to limit overall economic progress.

Proshare research retains its base case forecast of 3% and 3.1% GDP growth for Q3 2024 and Q4 2024, driven by improved consumption demand growth, marginal investment and government spending with a trade surplus trade benefit from the depreciated naira.