How Inflation Affects Nigeria’s GDP Growth

By Tolulope Oke

The National Bureau of Statistics (NBS), reported on Friday inflation has had a negative impact on Nigeria’s economic growth rate (GDP) over the time period under consideration.

The statistics authority observed that the results for the second quarter of 2022 had been negatively influenced by the recent inflationary trend.

The headline inflation rate in Nigeria jumped to 19.64% on an annual basis in July 2022, the highest level since 2005.

In comparison to the rate, which was 17.38% in July 2021, this was 2.27 percentage points higher.

The NBS had explained when it issued the July 2022 inflation figures that ‘this shows that the headline inflation rate increased in July 2022 as compared to the same month in the previous year of July 2021.’

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However, according to NBS, the recently reported Q2 2022 growth rate increased by 0.44 percentage points compared to 3.11 percent in Q1 2022 and declined by 1.47 percentage points from the 5.01 percent growth rate recorded in Q2 2021.

Aggregate GDP within the period stood at N45.004 trillion in nominal terms, higher than N39.123 trillion in the same period of 2021, indicating a year-on-year nominal growth rate of 15.03 per cent.

“The nominal GDP growth rate in Q2 2022 was higher relative to the 14.99 per cent growth recorded in the second quarter of 2021 and higher compared to the 13.25 per cent growth recorded in the preceding quarter. For better clarity, the Nigerian economy has been classified broadly into the oil and nonoil sectors.”