The last quarter of 2018 GDP growth rate of 2.38 percent is a reflective of rise in crude oil price and exchange rate stability, Prof. Uche Uwaleke has said.
Prof. Uwaleke who is the Head of Department, Banking and Finance, Nasarawa State University, Keffi also said the GDP growth rate recently released by the NBS is cheering news viewed against the fact that the expansion in national output was merely 1.5 percent in the second quarter of same year.
“The traction in the economy was seen more in the non-oil sector which recorded a modest improvement over that of the previous quarter. The picture is clearer when seen from a longer term perspective. GDP growth rate on an annual basis increased from 0.8 percent in 2017 to about 1.9 percent in 2018,” he explained.
He noted that “it is remarkable for an economy that exited five quarters of negative output growth in a row only a few months ago.”
“This performance has a lot to do with the recovery in crude oil price and output, accretion to foreign reserves and the associated stability in the foreign exchange market. It is also reflective of some of the policies and measures put in place by the government to stimulate the economy including the Anchor Borrower programme which has boosted the agric sector as well as other interventions by the CBN to ensure that credit is channeled to the real sector,” he also noted.
“It would appear also that the government’s investment in infrastructure, especially power, rail and roads is beginning to yield fruits. It is evident from the recent GDP figure that the economy has returned to a path of positive growth,” he noted.
He however warned that it is not yet Uhuru, noting that “A GDP growth rate of 1.9 percent in 2018 is a far cry from the about 3 percent target projected in the 2018 budget.”
He also observed that the growth “has not been a job-led growth considering that unemployment rate actually increased just about the same period, between Q3 2017 and Q3 2018, from 18.8 percent to 23.1 percent according to the National Bureau of Statistics.”
“So, we need to begin to focus on inclusive growth. This is because GDP growth alone, although necessary, is not a sufficient condition for economic development. The challenge therefore is for the government to ensure that the GDP growth rate is not only above the annual population growth rate of about 3 percent on a sustainable basis, but that such growth is driven especially by the employment-elastic sectors of the economy such as manufacturing, ICT, construction etc as opposed to the oil sector which contributes less than 10 percent of GDP and employs less than 5 percent of the population.”