…Says Q4 2023 GDP figures, indicate economy, adapting to national reforms
A group, the Independent Media and Policy Initiative (IMPI) has hailed President Bola Tinubu’s Reform Policies.
According to the group, Q4 2023 Gross Domestic Product (GDP) figures indicate the economy is fast adjusting to the President’s reformation policies.
A press statement on Tuesday, signed by Chief Niyi Akinsiju, chairman of IMPI, the latest GDP numbers from the National Bureau of Statistics (NBS) have shown in many ways that the Nigerian economy is not only fast adjusting but also adapting to the national economic reforms being spearheaded by the President Bola Tinubu administration.
The statement read, “The reformation is headlined by the twin policies of fuel subsidy removal and unification of the foreign exchange rates.
“Whereas the GDP figures of the third quarter (Q3) 2023, which was the first full quarter of the administration, evinced national economic production activities data which reacted sharply to the introduction of the two policies, the economy recorded a marginal increase in the GDP growth trajectory for the year which had commenced an incremental momentum in Quarter 1 (Q1) 2023 by a 2.31 percent growth.
“Though the figure was, in reality, a reflection of a 1.21 percent decline from a high of 3.52 percent growth recorded in the fourth quarter, 2022 (Q4 2022), the Q2 2023 GDP added some form of velocity when it grew by .20 percent to 2.51 percent.
“The half-year momentum, however, balked when the then new administration of President Tinubu announced on the May 29, 2023 inauguration day that it had removed the very popular payment of subsidy for Premium Motor Spirit (PMS) also known as petrol.
“A few days later on 14 June 2023, the Central Bank of Nigeria, taking a cue from the fiscal authorities, announced the unification of all segments of foreign exchange market, effectively shutting down all privileged access to the multiple windows forex market, that had enabled round tripping and other forms of profiteering from the forex market to the detriment of the nation’s foreign exchange reserve in particular and the larger economy, in general.
“From our reading of the national economy, the deployment of the two policies was received with a form of equanimity by economic agents in the country. In quarter three 2023, being the first full quarter of the implementation of the subsidy removal and unification of Forex rates, the economy, as reflected in the GDP figures, did not go down as some critics had anticipated. Rather, it grew by a marginal 0.3 percent in Q3 2023, to 2.54 percent from 2.51 percent in Q2 2023. That razor thin marginal increase was easily explained away as the consequence of the two policies that now constitute the drivers of the national economy.
“Some other critics had predicted an actual decline in the economy with macroeconomic indicators returning stressful figures. The inflation rates had hugged a high of 26.72 percent in September, 2023. In December 2023, inflation rate sped to a historic high of 28.9 percent amidst high food inflation rate of 33.93 percent while the Naira to Dollar exchange rate at the black market closed the year at N1200/$. This scenario for many commentators was the equivalent of the proverbial Sword of Damocles literally hanging over the head of the country. But the Q4 2023 GDP figure recently released by the NBS is a reflection of strong growth compared to Q3 2023. This is indicative of a resilient economy that is in ascendancy.
“By our consideration, if there was any doubt concerning the appropriateness of the deployment of the subsidy removal policy and the floating of the Naira exchange rate policy in Q3 2023, all that doubt evaporated with the strong showing of the GDP in Q4 2023, with a figure indicating an expanded national economic production value that grew by 3.46 percent (year-on-year), in real terms.
“Though we acknowledge that the figure is lower than the 3.54 percent of the corresponding Q4 2022, for context, as a body of analysts, we dichotomized the GDP aggregation periods into the “business as usual” economic era, and the “economic reform” era. The period starting from June, 2023 represents the reform era.
“Up until this moment, the national economy has continued to manifest different characterisations of macroeconomic disruptions across all indicators from high inflation rate to high interest rate, and high exchange rates to high unemployment rate.
“In the ordinary sense, not many analysts gave the reform-era economy a fighting chance to grow as exponentially as it did in Q4 2023, despite the hoopla that had characterised the reactions to the two policies in the public space.
“Though analysts attributed the relatively high GDP figure of Q4 2023 to a low base effect, yet, to our minds, the emerging reality is that the Nigerian economy appears to have been waiting for this hypodermic intervention to wean the populace off unmitigated consumption. This will enable the government channel earned revenue to savings and productivity enhancing infrastructure. Besides, a sectoral analysis of the GDP Q4 2023 showed even more interesting undercurrents in the different sectors that make up the national economy,” the statement added.
“The NBS explained that the performance of the GDP in Q4 2023 was driven mainly by the services sector, which recorded a growth of 3.98 per cent and contributed 56.55 per cent to the aggregate GDP. Impressively, the agriculture sector grew by 2.10 per cent, from the 2.05 per cent recorded in Q4 2022.
“This, in our consideration, may have provided answers to questions over the level of preparedness of the federal government to feed its citizens in the aftermath of the subsidy removal, and unification of the exchange rate. This will inexorably lead to depreciation of the local currency thereto.
“As it were, the increase in the growth of the agricultural sector, as reflected in increased crops production, is indicative of more jobs because agriculture, besides the food security implication, is a major enabler of employment.
“Directly linked with this, is the equally impressive 3.86 percent growth in the industry sector as encapsulated in the manufacturing sector. This is an improvement on the lowly -0.94 per cent recorded in the fourth quarter of 2022. In addition to this, the sector grew by 30.93 percent in 2023 compared to 6.93 percent in 2022 on an annual basis. It is, indeed, exhilarating to finally see a big movement in the percentage contribution of manufacturing to GDP recording a high of 17.34 percent. This is despite the envisaged constrictions of possible low productivity in the sector as a consequence of the twin policies highlighted above by some critics and cynics.
“This expansion in Manufacturing GDP should be a source of excitement because it is a key driver that propels progress in a nation’s economy. It is a powerful force that revolves on the growth, productivity, and competitiveness trajectories. A nation’s overall economic growth can greatly depend on robustness and performance of the manufacturing sector.
“Besides, the manufacturing sector is a high labour-absorbing sector that can create direct employment. It can also create indirect employment for supply chain actors in other sectors of the economy such as raw materials suppliers, logistics and transportation, farmers, miners etc.
“In addition, manufacturing helps to expand the tax base (number of taxable people and entities) and tax returns. This is because taxes are paid by both manufacturers and workers which ultimately increases the nation’s revenue.
“The manufacturing sector currently accounts for about 30percent of Nigeria’s Non-Import VAT and 26percent of its Company Income Tax. Given its potential to empower skills development, facilitate increased export and global competitiveness, andQ4 2023 GDP Figures Indicate Economy Fast Adjusting to Tinubu’s Reformation Policies*
“The latest Gross Domestic Product (GDP) numbers from the National Bureau of Statistics (NBS)have shown in many ways that the Nigerian economy is not only fast adjusting but also adapting to the national economic reforms being spearheaded by the President Bola Ahmed Tinubu administration. The reformation is headlined by the twin policies of fuel subsidy removal and harmonisation of the foreign exchange rates.
“Whereas the GDP figures of the third quarter, Q3 2023, which was the first full quarter of the administration, evinced national economic production activities data which reacted sharply to the introduction of the two policies,the economy recorded a marginal increase in the GDP growth trajectory for the year which had commenced an incremental momentum in Quarter 1 (Q1 2023) by a 2.31 percent growth.
“Though the figure was, in reality, a reflection of a 1.21 percent decline from a high of 3.52 percent growth recorded in the fourth quarter, 2022 (Q4 2022) the Q2 2023 GDP added some form of velocity when it grew by .20 percent to 2.51 percent. The half-year momentum, however, balked when the then new administration of President Tinubu announced on the May 29, 2023 inauguration day that it had removed the very popular payment of subsidy for petroleum motor spirit (PMS).
“A few days later on 14 June, 2023, the Central Bank of Nigeria, taking a cue from the fiscal authorities, announced the unification of all segments of foreign exchange market, effectively shutting down all privileged access to the multiple windows Forex market that had enabled round tripping and other forms of profiteering from the forex market to the detriment of the nation’s foreign exchange reserve in particular and the larger economy, in general.
“From our reading of the national economy, the deployment of the two policies was received with a form of equanimity by economic agents in the country. In quarter three, Q3 2023, being the first full quarter of the implementation of the subsidy removal and unification of Forex rates, the economy, as reflected in the GDP figures, did not go down as some critics had anticipated. Rather, the economy grew by a marginal 0.3 percent in Q3 2023, to 2.54 percent from 2.51 percent in Q2-2023. That razor thin marginal increase was easily explained away as the consequence of the two policies that now constitute the drivers of the national economy.
“Some other critics had predicted actual decline in the economy with macroeconomic indicators returning stressful figures. The inflation rates had hugged a high of 26.72 percent in September, 2023. In December, 2023, inflation rate sped to a historic high of 28.9 percent amidst high food inflation rate of 33.93 percent while the Naira to Dollar exchange rate at the black market closed the year at N1200/$. This scenario for many commentators was the equivalent of the proverbial Sword of Damocles literally hanging over the head of the country. But the Q4 2023 GDP figure released by the NBS recently is a reflection of strong growth compared to Q3 2023 and indicative of a resilient economy that is in ascendancy.
“By our consideration, if there was any doubt concerning the appropriateness of the deployment of the subsidy removal policy and the floating of the Naira exchange rate policy in Q3-2023, all that doubt evaporated with the strong showing of the GDP in Q4 2023, with a figure indicating an expanded national economic production value that grew by 3.46 percent (year-on-year), in real terms.
“Though we acknowledge that the figure is lower than the 3.54 percent of the corresponding Q4 2022, for context, as a body of Analysts, we dichotomized the analysis of the GDP aggregation periods into the “business as usual” economic era and the “economic reform” era. The period starting from June, 2023 represents the reform era.
“Up until this moment, the national economy has continued to manifest different characterisations of macroeconomic disruptions across all indicators from high inflation rate to high interest rate to high exchange rates and high unemployment rate, thus, in the ordinary sense, not many analysts gave the reform-era economy a fighting chance to grow as exponentially as it did in Q4 2023, not in the face of the hoopla that had characterised the reactions to the two policies in the public space.
“Though analysts attributed the relatively high GDP figure of Q4 2023 to a low base effect, yet, to our minds, the emerging reality, as it were, is that the Nigerian economy appears to have been waiting for this hypodermic intervention to wean the populace off unmitigated consumption and channel earned revenue to savings and productivity enhancing infrastructure. Besides, a sectoral analysis of the GDP Q4 2023 showed even more interesting undercurrents in the different sectors that make up the national economy.
“The NBS explained that the performance of the GDP in Q4 2023 was driven mainly by the services sector, which recorded a growth of 3.98 per cent and contributed 56.55 per cent to the aggregate GDP. Impressively, the agriculture sector grew by 2.10 per cent, from a growth of 2.05 per cent recorded in Q4 2022. This, in our consideration, may have provided the answer to questions over the level of preparedness of the federal government to feed its citizens in the aftermath of the subsidy removal and unification of the exchange rate which will inexorably lead to depreciation of the local currency thereto.
“As it were, the increase in the growth of the agricultural sector, as reflected in increased crops production, is indicative of more jobs creation because agriculture, besides the food security implication, is a major enabler of employment,” the statement added.
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