Specifically, the Gross Domestic Product, GDP, seems be slowing from its heady pace ahead of a pronounced decline in oil prices, SCB said in a report titled: ‘Nigeria: Reconstructing GDP’.
Ms Razia Khan, Head, Africa Research at Standard Chartered, said Nigeria’s average daily oil production has fallen to only 2.35millions per day, down from 2.51 million recorded a year earlier.
According to her, should the oil production levels go close to two millions barrel per day, the country’s oil break even price needs to rise as high as $88 per barrel before meaningful growth can be achieved.
She said the country’s oil sector contracted an estimated 2.32 per cent year-on-year in first quarter, attributing the problem to the prevalent cases of oil bunkering or trade in stolen in oil.
She stated that the loss of revenue is beginning to have a meaningful fiscal impact on the economy because the country has overshot its budget for this year assumption of 2.45millions per barrel.
This made the government to withdraw an estimated N839billion ( $5.24billion) from the Excess Crude Account (ECA) between January and May, this year to boost monthly statutory oil earnings, she added.
According to the report, the withdrawal from the ECA is not negotiable, despite the fact that the country’s crude oil export (Bonny Light) remains well above the $72 per barrel benchmark stated in the Budget.
On non-oil export, she noted that agriculture, which accounted for 40 per cent of the country’s GDP grew at its weakest rate in seven years in first quarter, increasing by only 4.15 per cent yearly.
She listed other sectors showing a more clear slowdown to include wholesale and retail, noting that growth in the two areas has fallen to 8. 35 per cent and 11.3 per cent on annualised basis.
It said the country’s worsening security situation, the impact of the New Year fuel subsidy adjustment, and possible disruption to the supply of goods and services may have accounted for the problems.
“Indeed, Nigeria’s Fast Moving Consumer Goods (FMGG) sector was the first to record meaningful lower growth in turnover. The sectors that have contributed the most to the economy’s relative slowdown, such as agriculture have traditionally accounted for less than two per cent of total bank lending,” she added.