Market price GDP declined 2.4% YoY Q3 2016 —NBS

Market price GDP declined year on year by 2.4 per cent in real terms in the third quarter of 2016 according to figures released Tuesday night by National Bureau of Statistics (NBS).

The figure was the lowest year-on-year growth rate in the rebased period starting from 2010 onwards.

In the third quarter, all components recorded year on year declines in real terms other than changes in Inventories and exports.

The report, however, showed that national disposable income recorded stronger growth than GDP during the period under review both in real and nominal terms, but year-on-year growth in domestic Compensation of Employees was still negative, but recovered significantly relative to the rate in the previous quarter, which was the lowest on record.

The economy, which fell into a recession in the first half of 2016 continued into the third quarter.

“The GDP component to record the lowest growth rate was General Government consumption; attacks on oil pipelines affected oil output, which in turn impacted on government revenues, but weaker economic conditions also led to lower than anticipated tax revenue. Investment (Gross Fixed Capital Formation) also declined substantially.”

Market price GDP declined slightly more in real terms than basic price GDP, by 2.4 per cent compared with 2.3 per cent, in the third quarter of 2016.

This was as a result of a larger decline in net taxes on products, of 5.0 per cent, which is the difference between the two measures.

Although growth in total real market price GDP declined in both quarters, and nominal GDP growth was significantly lower, this hides differing trends in the different components.

Largest driver of year on year growth in current price GDP was Household consumption in the third quarter of 2016.

The positive growth in household consumption was driven by an increase in prices: this component fell in real terms in both quarters.

However, inflation in the consumer price index rose to 17.6 per cent year-on-year by the end of the quarter.  Net exports weighed upon nominal GDP, as the value of exports was significantly reduced by a decline in the price of oil.

However, this effect was lower than in the previous quarter, as the depreciation in the exchange rate made the oil sales worth more in naira terms.

While this also affected imports, a greater percentage of imports have been affected by the parallel market rate which had already risen substantially.

There was also a large increase in imports of fuel; the value of mineral fuel imported (by SITC) more than tripled between the third quarters of 2015 and 2016.