Nigeria: Grim end to the year, but worst now behind us

Nigeria’s economy contracted by just 1.3% in Q4 2016, confirming our view that the slump bottomed out in Q3. Growth will pick up in 2017, and may even be a bit stronger than most expect. he National Bureau of Statistics reports that the contraction of Nigeria’s GDP eased from -2.2% y/y in Q3 to -1.3% in Q4. This was broadly in line with both our forecast (-1.5% y/y) and that of the Bloomberg consensus (-1.4% y/y). Today’s data confirm that 2016 was the worst year for Nigeria’s economy in over twenty years; GDP fell by 1.5% over the year as a whole. Nigeria’s oil sector has been the key cause of the country’s recent economic problems, and last quarter’s turnaround was also driven by an improvement in the crucial sector. The rate at which oil GDP is falling almost halved, slowing from -22% y/y in Q4 to -12.4% y/y in Q4. The contraction of non-oil GDP, by contrast, actually worsened a touch in Q4, though the difference was small