After 5 consecutive quarters of negative growth, Nigeria has emerged out of recession with a growth rate of 0.55% during Q2:2017, less than 1% higher than the -0.91% noted in the first quarter. The recovery was largely driven by an increase in oil production which came in at ~1.8million barrels per day during Q2:2017 and a significant improvement in foreign currency liquidity.
Unfortunately, growth in the real estate service & construction sectors did not follow a similar trend as both sectors grew at a slower pace relative to the preceding period (2017:Q1) at 0.13% and -3.53% respectively.
The Nigerian construction sector, which was in recession from Q2:2015 to Q4:2016 swung to growth in the first quarter of 2017 as increased access to foreign currency supported a minor reduction in costs within the highly import dependent sector. The growth rate of 0.15% noted during Q1:2017 was a significant improvement to the -6.03% recorded during the final quarter of 2016. However, this trend was not sustained as Q2:2017 saw the construction sector grow at 0.13%, 2 basis points less.
The real estate service sector, which records the sum of fees for services rendered through data retrieved from tax authorities, grew at -3.53%, less than the -3.03% noted during Q1:2017.
The performance of both sectors during Q2 demonstrate that improved access to foreign exchange will not be enough the foster notable growth. Lower purchasing power as a result of the devaluation and higher general costs of living put together with the high interest rate environment are making it very difficult for the built sector to thrive.