Expert Decries Low Financial Sector Contribution to GDP

 The Head, Global Research, Standard Chartered Bank, Razia Khan, has expressed concern over the relationship between growth in the financial sector and Nigeria’s gross domestic product (GDP).

She pointed out that Nigeria’s financial sector growth has been volatile.
The sector’s growth contracted immediately after the banking crisis and had posted a recovery later. However, grew at an average of only 0.9 per cent between 2010 and 2013.

This, Khan noted, comes “as something of a surprise.”

“This is atypical, and does not match the kind of relationship one would normally expect to see between growth in the financial sector and overall GDP.

“While Nigeria-specific issues are likely to have been a key influence, one would hope to see a normalisation of the relationship between financial sector growth and GDP growth over time,” she stated in a report to THISDAY at the weekend.

Nigeria’s real GDP was revised downwards to 5.49 per cent in 2013 from the projected 7.41 per cent earlier announced in the April rebasing exercise undertaken by the National Bureau of Statistics (NBS).

In its revised and final GDP rebasing results by output released at the weekend, the NBS also showed that the Nigeria’s real GDP output at constant price in 2013 stood at $407.85 billion (N63.218 trillion).

When the NBS released its rebased figures last April, the country’s nominal GDP output in 2013 was put at $510 billion (N79.050 trillion).

Continuing, Khan noted that latest GDP data was “not a surprise.”

Nigeria’s 2012 GDP was revised down to 4.21 per cent from an estimated 6.5 per cent previously. The data confirmed that first quarter 2012 exhibited particularly weak levels of activity.

“This reflects the slowdown that we observed in the immediate aftermath of the attempt to remove fuel subsidies in full, when activity was disrupted by protests initially, a worsening security situation, and the slow passage of Nigeria’s budget for that year.

“Even though the quarterly breakdown still suggests an acceleration of GDP over the course of 2013  (from 4.45% in Q1 2013 to 6.77% by Q4 2013), the average growth rate for 2013 is revised down to 5.5 per cent from about 7.3 per cent with the initial, rebased estimates.

“The immediate market impact of this data release is expected to be minimal.  In the past, Nigerian GDP data was more guesswork than anything robust,” she stated.

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