Nigeria’s GDP Underperforms, Economic Growth Falls To 2.31% In Q1

Nigeria’s Gross Domestic Product (GDP) grew by 2.31 per cent in the first quarter (Q1) of 2023 but underperforms when compared to previous quarters.

In its ‘Nigerian Gross Domestic Product Report Q1 2023’ released on Wednesday, the National Bureau of Statistics reported that the GDP growth in Q1 this year fell behind that of the fourth quarter (Q4) 2022 and the first quarter of 2022.

The report showed that in the fourth quarter of 2022, Nigeria’s economy rose by 3.52 per cent and increased by 3.11 per cent in the first quarter of last year. 

“Gross Domestic Product grew by 2.31 per cent (year-on-year) in real terms in the first quarter of 2023. This growth rate declined from 3.11 per cent recorded in the first quarter of 2022, and 3.52 per cent in the fourth quarter of 2022,” NBS said.

NBS pointed at the cash crunch experienced in Q1 2023 as a reason for the slow growth reported in the same period, “The reduction in growth is attributed to the adverse effects of the cash crunch experienced during the quarter,” the report reads. 

Recall that the Central Bank of Nigeria (CBN) had implemented the Naira redesign policy in February which backfired, creating a scarcity of the Naira and making it near impossible for cash-driven trades to run smoothly.

Many businesses, especially micro and medium businesses closed temporarily due to their inability to obtain Naira to buy goods and their customers struggle to withdraw cash to buy goods or pay for services, as bank digital platforms also crashed multiple times in February and March. 

NBS said Nigeria’s GDP had the Services sector to thank for driving its growth, “The performance of the GDP in the first quarter of 2023 was driven mainly by the Services sector, which recorded a growth of 4.35% and contributed 57.29% to the aggregate GDP.

“The agriculture sector grew by -0.90%, lower than the growth of 3.16% recorded in the first quarter of 2022. Although the growth of the industry sector improved to 0.31% relative to – 6.81% recorded in the “first quarter of 2022, agriculture, and the industry sectors contributed less to the aggregate GDP in the quarter under review compared to the first quarter of 2022,” the Bureau disclosed.