…Services sector remain highest contributor to GDP with 57.3%
By Charles Ebi
National Bureau of Statistics has said the gross domestic product in real terms grew by 3.84% in the fourth quarter of 2024 on a year-on-year basis, which is 0.38% higher than the rate recorded in Q4 2023 ,3.46%.
However, despite this anticipated increase, the full-year GDP growth rate is expected to fall below the Q3 rate.
The Federal Government had projected a 3.75% GDP growth target in the 2024 budget. This growth rate targeted by the government for the full year 2024 is more than the growth rate analysts expect for the same period.
Notably, the ongoing GDP rebasing exercise will not impact the 2024 GDP value, as it is set to take effect starting in 2025.
However industry analysts, provided the following outlooks on GDP performance.
Onyinyechi Onwubu, Investment Advisor FCSL Asset Management, expects Q4 2024 GDP to come in higher than the 3.46% reported for Q3′ 2024 by the National Bureau of Statistics ,NBS.
“We expect increased commercial activities due to the festive period in the latter part of the period to drive the Q4′ 2024 GDP to hover between 3.5% to 3.6% levels. The average GDP growth rate for 2024 is however expected to come in lower than this”.
Moyosore Onanuga, Head of Investments at AIICO, anticipates that Nigeria’s GDP growth in Q4 2024 to be between 2.5% and 3.5%, driven primarily by increased demand during the festive season and a trade surplus.
Similarly, it was higher by 0.38% basis points relative to a similar growth rate of 3.46% recorded in the third quarter of 2024.
This reflected a higher economic improvement when compared to the preceding quarter ,Q3 2024, with the service sector still playing the role of the major driver of the economy, which recorded a growth of 5.37% and contributed 57.38% to the aggregate GDP.
Similarly, on a quarter-on-quarter basis, the real GDP grew by 10.99% in Q4 2024, reflecting a higher production level than in Q3 2024.
The estimated economic activity in real terms for Q4 2024 stood at ₦22.61tn, which is higher than the rates recorded in Q3 2024 and Q4 2023, which stood at ₦20.11tn and ₦21.77tn.
This also highlighted the improvement in the quarter under review compared to the previous quarters of Q3 2024 and Q4 2024.
The NBS said the year 2024 ended with an overall annual GDP growth rate of 3.40%, from the 2.74% reported in 2023.
The NBS report stated that there was a decline in the performance of agriculture and industry in 2024 relative to 2023, while the performance of the Services sector improved in 2024.
In nominal terms, aggregate GDP stood at ₦78.37tn in Q4 of 2024, indicating a year-on-year nominal growth rate of 18.91%.
This is higher than the value of ₦65.9tn in Q4 2023 and ₦71.13tn in the preceding quarter.
The major contributing economic activities in real terms in the quarter under review are crop production 23.42%, trade 15.11%, telecommunication 14.40%, real estate 5.88%, financial institutions 5.76% and crude petroleum 4.60%.
Analyses of the contributions of the broad economic sectors in the period under review showed that agriculture contributed 25.59%, industry 17.03%, and services 57.38%. Agriculture and industry’s contribution was less than their contributions in Q4 of 2023 by 0.53% and 0.31 basis points.
The services sector had the highest contribution to the GDP in Q4 2024, surpassing their contribution in the corresponding quarter of 2023 by 0.83% basis points.
The annual contributions of the economic sector show that agriculture contributed 24.64% in 2024 which is lower compared to its contributions, which stood at 25.18% in 2023.
Similarly, the industry sector’s annual contribution was 18.47% which is also lower than the figure recorded for 2023 ,18.65%.
However, the services sector contributions for 2024 were 56.89% which exceeded the 56.18% recorded for 2023.
The Federal Government has a roadmap of a series of fiscal and monetary policy reforms to stabilize the economy and support growth in the economy:
The Nigerian National Petroleum Corporation ,NNPC, has been restructured into a commercial entity to improve efficiency and revenue generation.
Reforms include the introduction of Hydrocarbon Tax ,HT,Company Income Tax ,CIT, for petroleum companies, and revised royalty rates.
The Port Harcourt, Warri, and Kaduna refineries are undergoing rehabilitation to reduce import dependence and stabilize domestic oil prices.
The government has increased taxes, including VAT from 7.5% to 10%, and 25% personal income tax on individuals earning N100 million and above monthly
A digitized tax system is being introduced to improve tax collection and revenue generation.
To stabilize the exchange rate, the government is implementing bank recapitalization measures, revised regulations for Bureau de Change ,BDCs, and international money transfer operators ,IMTOs.
A hawkish monetary policy stance has been adopted to curb inflation, boost market confidence, and stabilize prices.
