Another small step forwards for growth
The NBS has released the national accounts for Q3 2017 to show an acceleration in growth from an upwardly revised 0.7% in the previous quarter to 1.4% y/y. Our expectation, shared with the wire services, was GDP growth of 1.6% y/y. The acceleration was a reflection of improved stability in the Niger Delta since the oil economy expanded by 25.9% y/y and 21.1% q/q. Some credit is therefore due to the political leadership for responding to local sensitivities. For the non-oil economy, the data showed y/y contraction of -0.8% and q/q expansion of 7.8%.
· The GDP data for Q2 was adjusted because oil output for the quarter has been revised upwards by the NNPC from 1.84 mbpd to 1.87 mbpd. We should not be surprised if this pattern is repeated in coming quarters.
· Oil’s share of real GDP amounted to 10.0% in Q3 2017 and has risen to the third largest in the economy after agriculture and trade. It has overtaken information and communications, and manufacturing. Through its linkages across other sectors, however, the indirect oil economy may be as large as 40% of GDP.
· The absence of seasonally-adjusted national accounts requires close attention. On a q/q basis, however, the non-oil economy has grown for two successive quarters, which is consistent with company reports and anecdotal evidence.
· Turning to the Q4 2017 data, we again see positive base effects for the oil economy. Output averaged 1.76 mbpd in Q4 2016 and had recovered to 2.03 mbpd (subject to revision) in the past quarter. We also expect a modest seasonal boost to household demand. We are looking for GDP growth of at least 1.9% y/y in the current quarter, which would bring a rate of 0.8% for the full year.