As Nigeria awaits the release of the Q4 2024 Gross Domestic Product (GDP) report, economic analysts predict that the growth rate will surpass the 3.46% recorded in Q3 2024.
However, despite this anticipated increase, the full-year GDP growth rate is expected to fall below the Q3 rate.
The federal government 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.
Expert insights
In interviews with industry analysts, they 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. In Q3 2024, GDP grew by 3.46% year-on-year, surpassing the 2.54% growth rate in Q3 2023 and the 3.19% recorded in Q2 2024, according to the National Bureau of Statistics. The services sector remained the primary driver of growth, contributing 53.58% to GDP, with industries such as consulting, banking, legal practice, and FinTech playing a significant role.
“GDP is also expected to be rebased which will likely affect expectations going forward. However, we expect the fundamentals to still hold – economic activity does not increase due to the rebasing. It more accurately captures the economic activity that is already happening in the country”.
Samuel Oyekanmi, Research Lead at Norrenberger reported that Nigeria’s GDP grew by an average of 3.21% between January and September 2024, with a full-year growth estimate of 3.3%, compared to 2.74% in the previous year 2023. “This highlights a modest but sustained economic expansion despite the challenges posed by contractionary policies and economic headwinds”.
Why Q4 Growth is expected to surpass Q3 2024
Several factors are expected to drive Q4 2024 GDP growth above the Q3 level:
- Festive season boost – Increased consumer spending on clothing, food, entertainment, energy consumption, and recreational activities during the festive period in the fourth quarter of the year usually stimulates economic activity.
- Trade surplus – Nigeria recorded a foreign trade surplus of N5.81 trillion in Q3 2024, and a continued positive trade balance in Q4 is expected to contribute directly to GDP growth.
- Strong services sector performance – With over 50% contribution to GDP, the services sector, led by telecommunications, banking, FinTech, and legal services, will remain a key driver of growth.
Progressive policies and reforms supporting economic growth
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:
1. Oil sector reforms
- 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.
2. Revenue-enhancing measures
- 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.
3. Monetary policy adjustments
- 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.