Economic traction was capped in the second quarter of the year, as sustained headwinds in the oil and gas sector led to a GDP growth of 2.5% YoY, defying analyst expectations of 2.8% YoY. The print was the lowest Q2 GDP growth since the exit from the pandemic. The oil sector (-13.4% YoY) shaved off about 80bps from growth, as average crude oil production (1.22mb/d) in the review quarter touched the second lowest point since 2013. We attribute the uninspiring oil outturn to the leakages in the Forcados terminals, ageing infrastructure and strike action by oil workers.
On the non-oil front, the services sector remained robust, profiting from the 34.6% YoY increase in credit creation in the financial services sector (+26.8% YoY) and positive pass-through from increased cross-border activities and enhanced e-commerce channels in the trade sector (+2.4% YoY). Nevertheless, we highlighted some weaknesses in the ICT sector, which moderated to a 4- quarter low of 8.6% YoY, owing to a 2.8% YoY decline in telephone subscribers and a 3.2ppt reduction in teledensity. This moderation likely reflects the decrease in Work-From-Home (WFH) structures and less intensity on electronic channels since the availability of cash.
Elsewhere, agriculture output recorded a 1.5% YoY growth in Q2’23, rebounding from the Naira illiquidity-induced contraction in the first quarter of 2023. In addition, the manufacturing sector (+2.2% YoY) sustained a growth trajectory, owing to the expansion of product lines by some FMCG players.
