The Organisation of the Petroleum Exporting Countries (OPEC) has commended Nigeria’s economic growth in the third quarter of 2023, stating that it “exceeded expectations.” The accolades were attributed to the robust performance of the non-oil sectors, particularly in services and agriculture.
According to OPEC’s Monthly Oil Market Report, Nigeria’s economy recorded a significant year-over-year increase of 3.1 per cent in the third quarter, surpassing the 2.6 per cent y-o-y growth in Q2 2023 and 2.4 per cent y-o-y in Q1.
The report highlighted the positive momentum in the non-oil sectors as a key driver of the country’s economic resilience. Despite challenges in the oil-dependent economy, Nigeria’s diversification efforts, especially in services and agriculture, played a pivotal role in achieving the notable growth.
However, OPEC expressed concerns regarding inflationary pressures within the country. The report revealed that Nigeria’s inflation rate escalated to 27.3 per cent in October, raising apprehensions about the economic impact of factors such as the removal of petrol subsidies and the devaluation of the naira.
The inflationary trends were attributed to persistent second-round effects following the policy changes. OPEC noted that the current inflation rate of 27.3 per cent compares to 26.7 per cent y-o-y in September and 25.8 per cent in August. Additionally, the annual core inflation rate, excluding farm produce, rose to 22.7 per cent y-o-y in October, compared to 22.1 per cent in September and 21.5 per cent in August.
While acknowledging Nigeria’s economic achievements, the report also raised concerns about the Purchasing Managers Index (PMI) decline, suggesting potential challenges for the economy ahead. The drop in the PMI is seen as an indicator of a potentially challenging economic situation that requires close monitoring.
OPEC’s report underscores the importance of maintaining a balanced economic strategy, emphasizing the significance of non-oil sectors in sustaining growth and resilience. The organisation encourages a comprehensive approach to address inflationary pressures, considering the broader economic landscape and potential future challenges.
