Nigeria’s Economy is expected to have another slow start in the first quarter (Q1) of 2025, continuing a year-long trend in which the momentum from the fourth quarter fades away due to slower economic activity and weaker spending. The country’s GDP growth is expected to drop from 3.8% in Q4 2024 to 3.6% in Q1 2025, according to the LBS Breakfast Session February 2025 report. Major factors for this anticipated economic slowdown include a steep reduction in post-festive spending after the “Detty December” festivities and a drop in agricultural activity as the harvest season comes to an end and farmers get ready for a new planting cycle.
As mostly observed in Q4, the holiday season—especially the well-liked “Detty December” festivities—causes a surge in consumer spending, which boosts the economy. Furthermore, government agencies scurry to spend down their budgets before the fiscal year ends, which raises public spending on projects like infrastructure. The boost also comes from the Agriculture sector, since harvest season peaks around Q4. However, once the holiday frenzy wears off, consumer spending becomes more frugal, government expenditure slows down as budgets are prepared, and farmers’ efforts to plant crops are reduced.
Seasonal GDP decline defines Nigeria’s economy.
These factors collectively create a drag on economic output in Q1. The nation’s economic performance is now characterized by this seasonal fluctuation. Analysis of the data from the Nigeria Bureau of Statistics (NBS) shows that this recurring trend has been consistent across Nigeria’s real GDP growth data over the last ten years, spanning from 2015 to 2024. Data analysis throughout this time period shows that the GDP growth rate in the first quarter of every year is nearly invariably lower than the GDP growth rate in the fourth quarter, underscoring the nation’s habitual first-quarter slowness.
In Q4 2015, real GDP growth was about 2.1%, but it dropped to about 0.7% in Q1 2016, which was a major drop as the economy started to enter a recession. The following year recorded a slight change to this trend. After worsening to -1.7% in Q4 2016, the real GDP grew to -1.0% in Q1 2017, signaling a gradual recovery from the recession, rather than a further decline. GDP growth increased to 2.1% by Q4 2017, signaling a recovery phase; however, growth slowed to about 1.9% in the first quarter of 2018, continuing the previous trend.
GDP fluctuations reflect pre- and post-pandemic shifts.
The following year showed a similar pattern, with GDP growth estimated at approximately 2.4% in Q4 2018 before dropping to 2.0% in Q1 2019. This consistent growth pattern was maintained in Q4 2019, when GDP growth was roughly 2.5 percent. By Q1 2020, this fell to about 1.9%. The COVID-19 Epidemic had a significant impact on the following year. Once more, the data indicate that GDP growth improved from about 0.1% in Q4 2020 to around 0.5% in Q1 2021, rather than falling, bouncing back from the pandemic decline.
Quarter four GDP growth increased to about 3.8% as the economy recovered in 2021, while Q1 2022 saw a sharp decline to 3.1%. The following year saw the continuation of this same pattern. GDP growth was approximately 3.6% in Q4 2022 but dropped to 2.3% in Q1 2023. Furthermore, increased activity in the services sector, which grew by 5.19% and contributed 53.58% to the total GDP, drove GDP growth of 3.46% in Q4 2023. But in the first quarter of 2024, GDP growth slowed to 2.98%, with the services sector accounting for a little higher share at 58.04%.
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This year-long trend emphasizes how important it is for businesses and policymakers to understand Nigeria’s economy’s inherent seasonal weaknesses. Despite the economy’s recovery from pandemic lows, the data still points to modest overall growth, with variations reflecting both internal (such as inflation, currency volatility, and seasonal spending patterns) and external (such as oil prices and global economic conditions) factors. Understanding these trends is crucial for strategic planning and for creating policies meant to round out the highs and lows and encourage more steady growth all year long.