Nigerians should exercise prudence in light of the country’s increasing GDP growth rate, according to investment and advisory company Comercio Partners, which also notes that economic progress may not result in an improvement in the country’s standard of life.
The company made this statement in response to the National Bureau of Statistics’ (NBS) most recent Gross Domestic Product (GDP) report, which showed that growing crude oil output helped Nigeria’s GDP increase to 3.19%.
The company claims that Nigeria’s economy may be “immiserizing,” a condition in which increased GDP growth has little impact on the general public’s level of life.
Read Also: BREAKING: Nigeria’s GDP Grows By 3.19% In Q2, 2024 – NBS Reports
It noted that the benefits of the economic growth might elude Nigerians due high inflation at over 33% and the hawkish interest rate environment at 26.75%. The firm explained based on these figures and applying Hanke’s Misery Index, Nigeria’s current score is 61.96%, highlighting the intense pressures endured by the population despite the reported economic gains.
The report states, “Despite recent growth, caution is warranted as Nigeria’s economic expansion may be ‘immiserizing,’ where increased GDP does not translate into improved living standards. With unemployment rate of 5%, inflation at 33.40%, and a challenging interest rate environment of 26.75% , this erode the potential benefits of this growth.”
“The GDP growth in Q2 2024 signals cautious optimism, with continued expansion contingent on addressing sector-specific challenges and stabilizing key growth drivers.”
Read Also: Divesting from fossil fuel could reduce Nigeria’s GDP by $30 billion – Afrexim Bank warns
The report, however, pointed out that the energy sector presents a more nuanced situation. While oil production saw an increase from Q2 2023 to Q2 2024, the decline from Q1 2024 underscores ongoing challenges that could threaten future growth.
Additionally, the firm expressed concern over the slowdown in non-oil sector growth compared to Q2 2023, particularly within manufacturing and agriculture, indicating potential vulnerabilities. To ensure sustained GDP growth, it is crucial that the services sector maintains its momentum and the industry sector continues its recovery.
Addressing the downward trends in agriculture and manufacturing is essential for achieving balanced and inclusive economic growth.
