In a strong performance for the Nigerian economy, the country’s Gross Domestic Product (GDP) expanded by 3.46% year-on-year in real terms during the third quarter of 2024, according to data from the National Bureau of Statistics (NBS). This marks a significant improvement over the 2.54% growth recorded in the same period in 2023 and a slight increase from the 3.19% seen in the second quarter of 2024.
Services Sector Leads Growth
The growth surge was driven primarily by the Services sector, which grew by an impressive 5.19% during the quarter and accounted for 53.58% of the overall GDP. This underscores the sector’s increasing importance in shaping the country’s economic trajectory, as its performance often dictates the broader economic outcome.
Other sectors also contributed to the positive performance. The Industry sector grew by 2.18%, recovering significantly from the modest 0.46% growth seen in Q3 2023. The Agriculture sector recorded a growth rate of 1.14%, slightly below the 1.30% growth it achieved in the same quarter last year.
In nominal terms, Nigeria’s aggregate GDP was valued at ₦71.13 trillion, reflecting a year-on-year increase of 17.26% from ₦60.66 trillion in Q3 2023.
Non-Oil Sector Performance
The non-oil sector, which remains the backbone of Nigeria’s economy, grew by 3.37% in real terms during Q3 2024. This represents a notable improvement from the 2.75% recorded in Q3 2023 and the 2.80% growth in Q2 2024.
Key contributors to non-oil sector growth included financial services, telecommunications, crop production, road transport, trade, and construction. Notably, the Financial Institutions sub-sector stood out, expanding by a remarkable 31.92% during the quarter, cementing its role as a critical driver of the economy. Despite ranking eighth in terms of GDP contribution, its rapid growth highlights its growing influence.
Overall, the non-oil sector contributed 94.43% to the GDP in Q3 2024, a slight dip from the 94.52% recorded in Q3 2023 but higher than the 94.30% in Q2 2024.
Oil Sector Highlights
The oil sector experienced a modest recovery, with average daily oil production rising to 1.47 million barrels per day (mbpd), up from 1.45 mbpd in Q3 2023 and 1.41 mbpd in Q2 2024. Real growth in the sector was recorded at 5.17% year-on-year, a considerable improvement from the -0.85% contraction in Q3 2023.
Despite these gains, the oil sector’s contribution to the overall economy remains limited. It accounted for 5.57% of the total real GDP in Q3 2024, a slight increase from the 5.48% recorded in Q3 2023 but lower than the 5.70% seen in Q2 2024.
Economic Outlook and Future Plans
The International Monetary Fund (IMF) projects Nigeria’s economy to grow at 2.9% for the full year 2024, citing challenges such as rising inflation and exchange rate pressures. However, year-to-date growth for the first nine months of 2024 has reached an estimated 3.22% compared to the same period in 2023.
Historically, the Nigerian economy has demonstrated strong performance in the fourth quarter, consistently achieving growth above 3% since 2021. This trend bodes well for meeting or exceeding the IMF’s annual growth projection.
Meanwhile, the federal government has announced plans to rebase Nigeria’s GDP and Consumer Price Index (CPI) by 2025. According to the Ministry of Finance, this effort aims to improve the accuracy of economic data and enhance investor confidence by providing a clearer picture of the economy. The Statistician General of the Federation, Adeyemi Adeniran, and his team are leading the initiative, which is expected to bring long-term economic benefits.
Bottom Line
Nigeria’s economic performance in Q3 2024 underscores the growing significance of the Services sector and the resilience of the non-oil sector in driving growth. While challenges remain, particularly in the oil sector, the government’s planned economic reforms and data rebasing efforts could further strengthen the economy and attract more investment.
