June 1, 2012

Decline in global output growth. The 2011 fiscal year in retrospect was a remarkable one. International economic and financial conditions deteriorated as a result of threats of financial shocks from Europe which created serious imbalances in the international economy. The global economic recovery slowed down considerably and many countries were faced with serious challenges leading to massive reduction of expenditure and austerity measures in the face of high and rising levels of sovereign debt. This invariably affected the global financial markets as uncertainties reflected in the volatility of stock, bond and foreign exchange markets. As a result, output growth declined while inflation rate assumed an upward trajectory in most advanced economies.

In our review of the past year, we observed that the growth rate recorded in the domestic economy is noteworthy in view of the slowdown in the global economy. The past year was characterised by a relatively impressive growth performance when matched to growth recorded in the global economy as global output growth declined from 5.2 per cent in 2010 to 3.8 per cent in 2011.  

Whilst we state that Nigeria’s growth rate was remarkable in relation to the deceleration observed in global output growth, we are however inclined to also highlight that the economy performed better in 2010. According to the 2011 report from National Bureau of Statistics (NBS), the economy grew by 6.64% in the first quarter, down from 7.36% recorded in the same period of 2010. In the second quarter, the economy grew by 7.72% up from the 7.69% posted in the corresponding quarter of 2010. The economy recorded growth rates of 7.40% and 7.68% in the third and fourth quarters of the year respectively, down from 7.86% and 8.36% recorded in the previous fiscal year. In general, the economy grew by 7.36% in 2011, compared to 7.98% recorded in 2010. The marginal decline was driven by lower agricultural output, the trickledown effect of reforms implemented in the financial sector as well as some significant disruptions in the oil and gas sector particularly towards the fourth quarter.

We also highlight that Nigeria ranks fourth of the ten fastest growing economies led by China (8.10%) based on available global economic data with reference to growth recorded in the first quarter of 2012 (Fig. 1). Nigeria’s Real Gross Domestic Product (GDP) on an aggregate basis, grew by 6.17% in the first quarter, down by 47 basis points from the 6.64% recorded in the corresponding quarter of 2011. (Fig. 2)

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