Economy records low growth, inflation rises by 11.7%

The National Bureau of Statistics on Monday said the country’s Gross Domestic Product recorded a slower growth of 6.48 per cent in the third quarter of 2012, as against the 7.37 per cent recorded in the corresponding quarter of 2011.

It also said the composite Consumer Price Index, which measures inflation, rose to 11.7 per cent in October compared to11.3 per cent in September.

On a year-on-year basis, the relative moderation in the headline index in September was offset by the rising cost of food items during the period.

These were contained in the NBS GDP and CPI reports, which were both released by the Statistician-General of the Federation, Mr. Yemi Kale, in Abuja on Monday.

The GDP report put the nominal GDP for the third quarter of 2012 at N10.967tn, as against N9.856tn recorded during the corresponding quarter of 2011.

It said the economy, comprising the oil and non-oil sectors, witnessed slower growth output in the third quarter of 2012 as a result of declines in non-oil sector output.

For instance, the report said while the oil sector witnessed positive growth for the first time in four quarters, the slower non-oil sector growth was driven by growth in activities recorded in the building and construction, cement, hotel and restaurant, and electricity sectors.

For the oil sector, it said, “The average daily crude oil production stood at 2.52 million barrels per day in the third quarter of 2012, as against 2.38 mbpd in the corresponding quarter of 2011.

“These figures, with their associated gas components, resulted in a growth rate, in real terms, of 0.08 per cent in oil GDP in the third quarter of 2012 compared with the -0.26 per cent for the corresponding period in 2011.”

During the period, the report said activities of vandals and oil theives decreased as a result of intensified surveillance instituted by government in the oil producing areas, adding that re-entry into previously abandoned fields by some oil majors and renewed production was responsible for the slight improvement in oil GDP during the period under review.

It said the sector also benefited from the relative stability in international crude oil market price and the exchange rate of naira to the dollar during the third quarter of 2012.

The NBS report, however, said while the oil sector’s contribution to real GDP in the third quarter of 2011 was 14.28 per cent, this declined to 13.42 per cent in the third quarter of 2012.

For the non-oil sector, which is the main driver of the economy, the NBS said it grew by 7.55 per cent in real terms in the third quarter of 2012, compared with 8.76 per cent in the corresponding period of 2011.

It attributed the drop in non-oil GDP to declines in output in the agriculture, telecommunications, wholesale and retail trade, and real estate sectors.

On agriculture, the report said, “In terms of output, the real agricultural GDP growth in the third quarter of 2012 stood at 3.89 per cent as against 5.76 per cent in the corresponding period of 2011.

“In addition to the prevailing security challenges facing most agricultural producing states in northern Nigeria, growth in the sector was also partially affected by floods, which reached a peak between late October and early November 2012, affecting several states across the country to varying degrees.

“However, due to the fact that the peak of the flooding was towards the end of the third quarter, the impact on agricultural production was less observed during the quarter. It is conceivable that the full impact of the floods will be more visible in Q4 2012 and Q1 2013.

“Nevertheless, NBS’ preliminary analysis suggests that the impact of flooding on agricultural GDP may not be as severe as feared.”

Other contributors to GDP are banking and insurance, which grew by 4.04 per cent; wholesale and retail, 9.62 per cent; telecommunications, 31.57 per cent; real estate, 10.24 per cent; manufacturing, 7.78 per cent; and business and other services, 9.11 per cent.

Explaining the reasons for the increase in inflation, the bureau said, “The rise in the Food Index was mainly due to higher food prices in various classes led by meat, fish, potatoes, yam and other tubers, fruits, bread and cereals, as well as other foods.

“While the impact of security concerns on agricultural production has eased significantly, the higher food prices continue to reflect the impact of recent floods on the production of farm produce, resulting in difficulty of moving food products to markets across the country, coupled with higher demand for food items due to the just concluded Muslim festival.”