Economic Challenges Weaken Manufacturing Sector, Contribution to GDP Down 20.95%
Arthur Eriye
Data from the National Bureau of Statistics (NBS) has revealed that Nigeria’s manufacturing sector’s contribution to the Gross Domestic Product (GDP) receded in the first two quarters of 2024 by20.95 per cent when compared wit the same period in 2023.
According to the NBS data, the sector’s contribution to GDP dropped from 16.04 per cent in Q4 2023 to 12.68 per cent in Q2 2024, indicating the sector’s increasing struggles amid the country’s economic challenges.
The Q4 2023 report indicated a manufacturing sector contributing 16.04 per cent to the GDP, showcasing the sector’s substantial role in Nigeria’s economy.
However, this contribution sharply declined in Q1 2024 to 14.79 per cent, marking the beginning of a downward trend that has led to its further drop to 12.68 per cent by Q2 2024.
The manufacturing sector’s nominal GDP growth in the second quarter of 2024 was recorded at 1.91 per cent year-on-year. This represents a significant decline of 27.99 per cent -points compared to the 29.90 per cent growth recorded in the corresponding period of 2023.
Moreover, it marks a 6.30 per cent point decrease from the 8.21 per cent growth registered in the first quarter of 2024. On a quarter-on-quarter basis, the sector experienced a contraction of 11.25 per cent during Q2 2024.
The nominal GDP growth rate is crucial as it represents the monetary value of all goods and services produced by the manufacturing sector without adjusting for inflation.
The sluggish growth in nominal terms indicates that the sector is struggling to expand its output, and this stagnation could have far-reaching implications for employment, investment, and overall economic stability in Nigeria.
The manufacturing sector’s contribution to nominal GDP in Q2 2024 was 12.68 per cent, down from 14.55 per cent in Q2 2023 and lower than the 14.79% recorded in Q1 2024.
When examining the real GDP growth and the sector’s contribution to overall GDP, the manufacturing sector’s performance presents a concerning picture.
Real GDP growth in the manufacturing sector, which adjusts for inflation, provides a clearer view of the sector’s actual production levels and economic value.
The real GDP growth in the manufacturing sector also reflects the sector’s ongoing struggles. In Q1 2024, real GDP growth for the manufacturing sector was 1.49 per cent year-on-year, a slight improvement over the previous quarter, with a contribution to overall GDP of 9.98 per cent.
However, by Q2 2024, real GDP growth had further declined to 1.28 per cent, which is lower than both the growth recorded in Q2 2023 and the preceding quarter.
The quarter-on-quarter growth rate in Q2 2024 stood at -15.16 per cent, a significant drop from the 1.74 per cent quarter-on-quarter growth observed in Q1 2024.
