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GDP By Expenditure

TheGross Domestic Product (GDP) can be derived as the value of all goods andservices available for final uses and export. GDP at market prices includes nettaxes on products; taxes are subtracted to obtain basic price GDP.

Theexpenditure approach measures the final uses of the produced output as the sumof Final consumption, Gross Capital Formation and Exports less Imports, whichare considered in turn in this report. Consumption of fixed capital-a measureof depreciation of assets-comprises the difference between Gross DomesticProduct (GDP) and Net Domestic Product (NDP) and is also considered in thisreport.

InQ3 2020, the gross domestic product declined in real terms by -3.62%year-on-year but rose to 0.11% in Q4 2020, ending the trend of two quarters ofnegative growth. For annual 2020, the gross domestic product grewin real terms by -1.92% year-on-year, slower than 2.27% recorded in 2019,and 1.91% recorded in 2018.

Household Final ConsumptionExpenditure:

Thisconsists of expenditure, including imputed expenditure, incurred by residenthouseholds on individual consumption goods and services. This is calculated asa residual.

General Government Final ConsumptionExpenditure:

Thisconsists of expenditure, including imputed expenditure, incurred by governmentat all levels on both individual and collective consumption of goods andservices. Individual consumption items are those that are provided toindividual households, such as education and health services. Collectiveconsumption items relate to goods and services utilised by society as a whole,such as security and infrastructure.

Not for Profit Institutions ServingHouseholds Final Consumption Expenditure:

Thisconsists of expenditure, including imputed expenditure, incurred byNot-for-Profit-Institutions-Serving-Households, which consist of organisationssuch as charities and non-government organisations.

Gross Fixed Capital Formation:

Thisis measured as the total value of producer's acquisitions, less disposals, offixed assets during the accounting period, plus certain additions to the valueof non-produced assets (such as improvements to natural assets) realised by theproductive activity of institutional units.

Change in Inventories:

Thisconsists of changes in; stocks of outputs that are still held by units thatproduced them prior to their being further processed, sold, delivered to other unitsor used in other ways, measure by the value of the entries into inventoriesless the value of withdrawals and the value of any recurrent losses of goodsheld in inventories.

Exports of Goods and Services:

Thisconsists of sales of goods and services to residents abroad, from residentswithin Nigeria

Imports of Goods and Services:

Thisconsists of sales of goods and services from residents abroad, to residentswithin Nigeria

Consumption of Fixed Capital:

Thisrepresents the reduction in value of the fixed assets used in production duringthe period, that results from physical deterioration, normal obsolescence ornormal accidental damage.

GDPExpenditure - Final Consumption Components

HouseholdFinal Consumption

Householdfinal consumption, in real terms, grew by 6.10% and 16.59% in Q3 and Q4 2020,respectively, on a year on year basis, compared to the -1.98% growth in Q3 2019and -0.41% growth in Q4 2019. Overall, in 2020, real household finalconsumption expenditure rose by 0.81% from -1.06% recorded in 2019. On aquarter on quarter basis, real household consumption expenditure grew by 38.85%in Q3 and 20.76% in Q4 2020.

Innominal terms, household final consumption expenditure grew by -1.83% in Q3,and -0.71% in Q4 2020, resulting in an annual growth rate of -1.48%. The annualgrowth rate was -11.33% points slower than recorded in the previous year. On aquarter on quarter basis, growth was recorded at 23.04% in Q3, and 7.68% in Q42020, compared to the preceding year's 11.74%, and 6.46% in the correspondingquarters. Household consumption accounted for 63.63% of real GDP at marketprices in Q3 2020, and even higher at 70.45% in Q4 2020.

Not-for-Profit-Institutions-Serving-Households(NPISH) Consumption

Finalconsumption expenditure by non-profit institutions serving households recordedgrowth rates of 289.76% in Q3 and 418.54% in Q4 2020, year on year in realterms. For annual 2020, growth in real expenditure for this component wasrecorded at 212.36% year on year. Quarter on quarter, growth in real NPISHexpenditure stood at 106.61% in Q3 but dropped to 82.75% in Q4 2020. Thisexpenditure component accounted for 1.30% of real GDP expenditure at marketprice in Q3 and a share of 2.19% in Q4 2020. For 2020, it accounted for 1.24% of total real GDP expenditure at marketprices.

GeneralGovernment

InQ3 and Q4 2020, real general government expenditure grew by 99.18% and 12.13%respectively, compared to 2.26% and 22.38% in 2019. On an annual basis, realgrowth for general government expenditure in 2020 stood at 61.58% compared to8.78% in 2019. Quarter on quarter, growth was recorded at -18.02% and -25.39%in Q3 and Q4 2020 respectively.

Innominal terms, government expenditure grew by 104.41% in Q3 and 15.07% in Q42020 resulting in an annual nominal growth rate of 65.52% in 2020. Governmentexpenditure, however, grew more rapidly in 2020 than in 2019 by 53.35% points.In 2020, this component accounted for 9.40% of total real GDP expenditure atmarket price.

GrossFixed Capital Formation (GFCF)

RealGFCF recorded growth in the third and fourth quarters of 2020 at -6.57% and-1.08% year-on-year respectively. On an annual basis, real GFCF grew by -7.55%,or by -15.84% points lower than in 2019. Quarter on quarter, real GFCF grew by 3.25% and 22.83% in Q3 and Q4 2020respectively. In nominal terms, Q3 and Q4 2020 recorded 21.78% and 36.42%growth rates. GFCF grew by 23.21% nominally in 2020 while accounting for 14.95%of total real GDP expenditure at market prices in 2020.

Changesin Inventories

Changesin inventories, often regarded as a sign of economic confidence (as firms stockup on products if they anticipate higher future demand), declined by -7.76% and -9.01% in Q3 and Q4 2020 respectively in real terms. For 2020, this componentgrew by 5.94% compared to a growth of -26.23% in the previous year. In nominalterms, changes in inventories grew by 0.86% year on year in 2020 but accountsfor less than 1% of total real GDP expenditure at market prices.

Consumptionof Fixed Capital

Consumptionof fixed capital is a measure of depreciation of assets and represents thedifference between gross domestic product (GDP) and net domestic product (NDP).Growth in consumption of fixed capital in real terms declined by -0.71% in Q32020 and by -0.89% in Q4 2020 compared to -44.78% recorded in Q3 2019 and-0.34% recorded in Q4 2019. Annual growth rate was -1.29% in 2020, better than-23.15% recorded the previous year.  Innominal terms, Q3 and Q4 2020 grew by 6.86% and 13.64% respectively. CFC grewby 7.05% in 2020 compared to 16.33% a year earlier.

Exportsof Goods and Services

Inthe third and fourth quarters of 2020, real exports grew by -42.05% and-57.79%, year on year, resulting in an annual growth rate of -26.96%, or 41.94%points lower than 14.98% recorded in 2019. Quarter on quarter, however, growthin real exports remained negative from Q1 2020 to Q4 2020.

Innominal terms, exports in goods and services fell by -40.62% in Q3 and -35.96%in Q4 2020 to reach annual growth rate of -34.24% in 2020 compared with 3.53%in 2019.

Importsof Goods and Services

Aswith exports, imports of goods and services also declined in real terms,recording -22.74% in Q3 and -39.93% in Q4. On an annual basis however, the realgrowth of imports was worse than 2019, at -23.30% in 2020 compared to 27.26% inthe previous year. On a quarter on quarter basis, imports grew by 16.29% in Q3but declined -3.48% in Q4 2020.

Nominalimports of goods and services fell during the three quarters (Q2, Q3 & Q42020), recording -22.23% in Q2, -4.54% in Q3, and -25.54% in Q4 2020, year onyear, to give an annual growth rate of -11.38%. This was -38.97% points lowerthan annual growth rate of 2019. Quarter on quarter, nominal imports rose in Q3by 22.16%, but declined in Q4 2020 to -3.15 %.

Net Balance of Trade

Dueto declining rates of growth in exports and imports in 2020, the growth in netbalance of trade (or net exports) was negative in Q3 and Q4 2020. On a year onyear basis, the net trade balance recorded -52.39% growth rate in real terms inQ3 and -72.61% growth rate in Q4. This resulted in an annual growth rate of-29.55% in real terms. On a quarter on quarter basis, the net trade balancegrew by -30.43% and -53.90% in Q3 and Q4 2020 respectively. This componentaccounted for 13.25% of total real GDP expenditure at market prices in 2020.

ClickHere to Download Q1-Q4 2020 GDP by Expenditure PDF Report

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