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Over N1 trillion was lost by the food, steel, and 24 other sectors of the economy in the second quarter of 2023.
According to an examination of the Nigerian Bureau of Statistics’ data on the Gross Domestic Product, 26 economic sectors had declines in the second quarter.
As a result of their combined contribution to real GDP falling to N6.54tn from N7.69tn in the first quarter of 2023, these sectors lost N1.16tn in economic value.
The sectors that shrank in Q2, 2023 were fishing, crude petroleum and natural gas, cement, food, beverage and tobacco, textile, apparel and footwear, wood and wood products, pulp, paper and paper products, non-metallic products, basic metal, iron and steel, motor vehicles and assembly, other manufacturing, construction, accommodation and food services, road transport, and air transport.
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Other sectors that were negatively impacted In Q2 2023 were post and courier services, publishing, motion pictures, sound recording and music production, arts, entertainment and recreation, financial institutions, real estate, professional, scientific and technical services, education, other services, metal ores, and plastic and rubber products.
In its recently released GDP results, the NBS revealed that real GDP marginally rose by o.20 percentage points to 2.51 per cent in Q2, 2023 from the 2.31 per cent it was in Q1, 2023.
It said, “Nigeria’s Gross Domestic Product (GDP) grew by 2.51 per cent (year-on-year) in real terms in the second quarter of 2023. This growth rate is lower than the 3.54 per cent recorded in the second quarter of 2022 and may be attributed to the challenging economic conditions being experienced.”
In the first quarter of 2023, cash scarcity caused the economy to shrink from 3.52 per cent in Q4, 2022 to 2.31 per cent in Q1, 2023.
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The NBS stated, “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. The reduction in growth is attributed to the adverse effects of the cash crunch experienced during the quarter.”
While a 0.20 percentage point quarter-on-quarter growth was recorded in Q2, 2023, worsening economic hardship ensured that growth remained below 3 per cent. Inflation rose for the sixth consecutive month to 22.79 per cent in June, increasing pressure on purchasing power.
Nigeria’s GDP growth is still below the projections of the International Monetary Fund which expects a 3.2 per cent growth rate for 2023.
The decline in economic activity has been tied to recent economic reforms, which have been predicted to cause some discomfort in the short term. The removal of fuel subsidy and the unification of exchange rates have hit businesses negatively.
According to the Manufacturers Association of Nigeria, manufacturers have been forced to cut jobs due to the current harsh economic environment and reduced productivity.
In a recent interview with The PUNCH, the National Vice Chairman of the Nigerian Association of Small-Scale Industrialists, Segun Kuti-George, said, “If the GDP decreases, it can trigger job losses. It means that our output is on the decline. It means there is reduced productivity.”
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Musa Yusuf, recently told The PUNCH that economic reforms have impacted GDP growth negatively
