Nigeria’s GDP Growth Hits 3.84% in Q4 2024, Driven by Services Sector

Nigeria’s Gross Domestic Product (GDP) expanded by 3.84% year-on-year in real terms during the fourth quarter of 2024, marking a significant improvement over the 3.46% recorded in Q4 2023 and the third quarter of 2024. This growth was primarily driven by the robust performance of the services sector, which grew by 5.37% and contributed 57.38% to the country’s total GDP.

The latest figures, released in the Nigerian Gross Domestic Product Report for Q4 2024, highlight a sustained upward trend in economic activity, reinforcing the nation’s economic recovery and expansion.

Quarterly and Annual GDP Growth Trends

The Q4 2024 GDP growth of 3.84% follows a series of positive quarterly performances throughout the year. In Q1 2024, Nigeria’s real GDP at basic prices grew by 2.98% year-on-year, up from 2.31% in Q1 2023. The second quarter of 2024 saw further improvement with a growth rate of 3.19%, surpassing the 2.51% recorded in Q2 2023.

Comparatively, these figures reflect an increase of 0.67 percentage points in Q1 2024 and 0.68 percentage points in Q2 2024 relative to the same quarters in 2023. The overall annual GDP growth for 2024 stood at 3.40%, up from 2.74% in 2023, underscoring steady economic recovery.

Sectoral Contributions to GDP Growth

• Services Sector: The services sector was the primary driver of Nigeria’s economic growth in Q4 2024, expanding by 5.37% and contributing 57.38% to the aggregate GDP. This sector’s performance underscores the growing influence of service-oriented industries in Nigeria’s economy.
• Agriculture Sector: The agriculture sector recorded a growth of 1.76% in Q4 2024, down from 2.10% in Q4 2023. Despite the slight decline, agriculture remains a crucial component of Nigeria’s economy, supporting employment and food production.
• Industry Sector: The industrial sector experienced a slowdown, growing by 2.00% in Q4 2024 compared to 3.86% in Q4 2023. The decline signals challenges in manufacturing and extractive industries that require policy interventions to stimulate productivity.

Household and Government Consumption Expenditure

Household consumption expenditure in Q1 and Q2 of 2024 declined sharply by 42.28% and 61.18% year-on-year, respectively. These contractions indicate reduced consumer spending power, possibly due to inflationary pressures and economic uncertainties.

Government consumption expenditure, on the other hand, grew significantly in Q1 2024 by 21.76%, surpassing the 17.83% recorded in Q1 2023. However, Q2 2024 saw a decline of -5.54%, reversing the 5.79% growth observed in Q2 2023. These fluctuations suggest varying government spending patterns across different quarters.

Net Exports and National Disposable Income

Net exports continued to record positive growth since Q3 2023, rebounding from a negative growth rate in Q2 2023. In Q1 and Q2 of 2024, net exports surged by 143.83% and 340.30%, respectively, representing a stark contrast to the -1,650.44% and -14.22% recorded in the same quarters of 2023. The strong performance in net exports indicates increased foreign demand for Nigerian goods and improved trade balances.

National Disposable Income also showed remarkable improvement, growing by 12.91% in Q1 2024 and 17.44% in Q2 2024. These figures exceeded the 9.17% growth recorded in Q1 2023 and 8.45% in Q2 2023, suggesting a strengthening financial position for households and businesses.

Compensation of Employees: Mixed Performance

Employee compensation saw mixed results in 2024. In Q1 2024, compensation of employees grew by 12.16% in real terms, though this was lower than the 15.08% recorded in Q1 2023. However, Q2 2024 saw a sharp decline of -19.68%, a stark contrast to the 19.41% growth recorded in Q2 2023. The drop highlights potential labor market challenges, including wage stagnation and employment uncertainties.

Economic Outlook for 2025

The steady GDP growth in 2024 reflects Nigeria’s resilience despite economic headwinds. However, the decline in household consumption and employee compensation presents challenges that need to be addressed through targeted economic policies.

For sustained growth in 2025, Nigeria must focus on:

• Enhancing service sector productivity: Given its dominant contribution to GDP, policies to support tech-driven services, telecommunications, and financial services will be crucial.
• Revitalizing the industrial sector: Manufacturing and extractive industries need strategic investments to improve output and employment generation.
• Addressing inflationary pressures: Measures to stabilize consumer purchasing power will be vital in reversing the decline in household consumption.
• Boosting employment and wages: Improved labor market conditions are essential for increasing compensation of employees and overall economic stability.

As Nigeria navigates the evolving economic landscape, policymakers and stakeholders must work towards a balanced growth strategy that ensures inclusive development and improved living standards for all citizens.