NIGERIA: Review of GDP and Inflation for 2011

Gross Domestic Product:

In 2011, the Nigerian economy grew at an estimated real rate of 7.36 percent . This was slightly lower than the 7.98 percent recorded in 2010.  In 2011 on a quarterly basis, the economy grew by 6.68% in the first quarter, down by 0.64 percentage points year-on-year. In the second quarter, the economy grew by 7.61% down marginally from the 7.71% posted  in the corresponding quarter a year earlier. The economy recorded growth rates of 7.30% and 7.68% in the third and fourth quarters of the year respectively, down by 0.66 percentage points and 0.92 percentage points year-on-year.

Mangoes on display at Zuba Fruit Market in Abuja.NAN Photos

INFLATION

The country’s  headline inflation rate trended lower in 2011 compared to 2010, even though 2011 was an election year with the potential for large monetary inflows within the economy. The average inflation rate for 2011 was recorded at 10.9%, down from the average of 13.8% in 2010, which had witnessed a year-on high of 15.6% (year-on-year) in February of 2010. As shown in Figure 4, the headline rate ranged between 9.3% (August) and 12.8% (March) settling at 10.3% by December 2011. This was 1.53 percentage points lower than December 2010 and a further 3.65 percentage points lower than December 2009

The “all items less farm produce index” (also known as the “core” index) which excludes prices of more volatile agricultural products peaked in May of 2011 at 13.0% and trended lower till the end of the ycpear. By December 2011, the rate settled at 10.8%, down marginally from the 10.9% recorded in December 2010 and 0.4 percentage points lower than the 11.2% recorded in December 2009. The reason for the early build up in the core index was as a result of increases

in prices of household items, building materials and kerosene  prices. Towards the end of the year, the upward pressure on prices appear to have been  moderated by the relatively late release of allocations to federal state and local governments, as well as end of year sales in various parts of the country. Proactive but very restrictive monetary policy implemented by the Central Bank of Nigeria in the early part of last year also appears to have countered possible fiscal effects in the latter part of the year.

The Food index which records prices of agricultural products climbed higher during the earlier part of the year to reach a maximum of 12.2% in May 2011 before generally trending downward. The increases in prices were partially as a result of the planting season. Prices receded between May and July of the year to reach a low of 7.9% in July. Prices then climbed higher to end the year at 11.0%, albeit 1.7 percentage points lower than the 12.7% recorded in December of 2010 and 4.5 percentage points lower than the 15.5% recorded in December of 2009.