Last week, the National Bureau of Statistics (NBS) released its FY-2021 GDP report. The non-oil sector expanded by 4.7 percent y/y in Q4-2021, bringing FY-2021 growth to 4.4 percent.
This marks a modest rebound from the 1.3 percent contraction in FY-2020. The sector remains the primary driver of economic growth, with the oil sector still lagging.
The growth in the non-oil sector was mainly driven by expansion in the services sector, growing by 5.6 percent y/y in FY-2021, on the back of a sturdy outing in the ICT sub-sector (+6.6 percent y/y), Financial Services (+10.1 percent y/y), and recovery in Trade (+8.6 percent y/y).
Increased internet penetration & data usage, strong credit creation and resumption of international travel were all factors that contributed to solid expansion in ICT, Financial Services and Trade.
In addition, the Agricultural sector (+2.1 percent y/y) and Manufacturing sector (+3.4 percent y/y) also contributed to the strong growth in the non-oil sector.
The agricultural sector defied banditry/insecurity concerns, unfavourable climate conditions and legacy infrastructure challenges as strong food demand remains an overriding positive.
Similarly, reopening economic activities and more robust consumer & business consumption supported manufacturing output.
By extension, improvement in supply chain bottlenecks provided much-needed relief for the sector.
Going forward into 2022, we expect non-oil GDP to remain the primary driver of GDP. Although we expect higher prices to drive growth in the oil sector, we believe the contraction in the oil sector has more to do with the investment environment and its long-term viability rather than just price concerns.
The continued mobile penetration and demographics will boost ICT adoption, expanding that sector. We expect CBN intervention policies to continue to provide much-needed stimulus in that space for the Agricultural sector.
On the other hand, the Manufacturing sector and Trade in services sectors which enjoyed a low base from 2021, may remain sluggish in 2022, mainly due to the FX uncertain and stagnant demand going into 2022. ~United Capital Plc