Higher Crude Oil Production Propels GDP Growth; Real GDP Expands 1.40% Year-on-Year

November 23, 2017/Cordros Research

According to data released by the National Bureau of Statistics (NBS), growth strengthened in the domestic economy in the three months to September, with real GDP growth of 1.40% y/y (Q2-16: -2.34% y/y; Q2-17: +0.72 y/y, revised from 0.55% y/y) during the period, heralding the second consecutive expansion in output growth following the five successive contractions which started in the first quarter of 2016. The GDP figure was 15 bps higher than our projected 1.25% and 13 bps below Bloomberg’s compiled average estimate of 1.53%. Largely, the sustained growth was powered by notable expansion in the Oil Sector (25.89% y/y), augmented by resilience in Agriculture (3.06% y/y) and Other Services (1.7% y/y), which masked weakness in Manufacturing (-2.85% y/y), Services (-3.0% y/y), and Trade (-1.7% y/y). Quarter-on-quarter, real GDP growth was 8.97%.

Non-Oil Sector Rebound to Complement Continued Growth in the Oil Sector 

We anchor growth in Q4-2017 on further expansion in the oil sector (on stable output) and a rebound in the non-oil sector (on stronger impact of foreign exchange stability, higher capital releases by the FGN, and continued growth in agriculture). Overall, we estimate GDP growth of 2.26% y/y in the fourth quarter of the year and revise our 2017FY estimate slightly lower to 0.92% (previously 0.97%).