Nigeria’s economy grew 1.4 percent year-on-year in the third quarter, the National Bureau of Statistics said on Monday, extending its slow climb out of its first recession in a generation.
Africa’s largest economy returned to growth in the second quarter of 2017 but the recovery has been fragile due to the continuation of depressed oil revenues and a shortage of hard currency.
The National Bureau of Statistics said oil production, on which the OPEC member state’s economy largely relies, stood at 2.03 million barrels per day in the third quarter.
President Muhammadu Buhari’s 2017 budget outlines record levels of spending, especially on infrastructure, to try to kick-start growth, but the plan has faltered.
The budget was delayed as lawmakers withheld approval, and even when passed, planned capital spending has been slow to happen.
Despite these problems, Buhari’s government is proposing record spending of 8.6 trillion naira ($27.30 billion) for 2018, although economists have questioned whether that goal is realistic.
Oil production in the volatile Niger River delta region, where armed militants have attacked pipelines in the past, rose to 2.03 million barrels a day in the third quarter from a revised 1.87 barrels a day, the statistics office said.
The crude sector contributed 10 percent to real GDP, according to the NBS. The non-oil sector contracted 0.8 percent in the period compared with growth of 0.5 percent in the second quarter.
“It’s not surprising that the economy expanded further given relative stability in the Niger delta, which helped boost oil production,” Gaimin Nonyane, London-based economic-research head at Ecobank Transnational Inc., said by email. But the recovery “remains fragile” with pressure points in the economy including high inflation, she said.
The faster economic growth may allow the Central Bank of Nigeria to continue its tight monetary policy to fight inflation that, at 15.9 percent in October, has been above the upper end of the 6 percent to 9 percent target range for more than two years.
“The unexpected contraction in non-oil GDP is a big concern,” Razia Khan, head of macroeconomic research at Standard Chartered Bank Plc in London, said by email. “It likely creates more pressure for a more accommodative monetary policy stance from the CBN — but no change in November is still our base case for now.”