(Bloomberg) -- Nigeria’s economy grew more than anticipated in the third quarter, buoyed by its services sectors that expanded at its fastest pace in almost two years.
Gross domestic product expanded an annual 3.46% in the three months through September, compared with growth of 3.19% in the previous quarter, according to data released by the Abuja-based National Bureau of Statistics on Monday. The median estimate of six economists in a Bloomberg survey was 2.86%.
The services sector, particularly telecommunications and financial services, was the main driver of growth in the quarter. It contributed more than half to aggregate GDP and was behind faster growth in the non-oil sector, which accelerated to 3.37%, from 2.8% in the prior three months.
The country’s four largest banks by market value — Guaranty Trust Holding Co., Zenith Bank Plc, United Bank for Africa Plc and FBN Holdings Plc — recently reported that their nine-month net interest income had more than doubled, compared with a year earlier boosted by higher interest rates.
“Relatively sound and less erratic growth in the country’s non-oil economy points to an expanding, more stable economic base and a potential divergence away from Nigeria’s reliance on oil,” Oxford Economics economist Brendon Verster said in a research note. “Still, oil production is expected to remain a cornerstone of the West African economy.”
The oil sector grew 5.17% in the third quarter as production increased to 1.47 million barrels per day, from 1.45 million barrels a year earlier, aided by improved security in the Niger Delta.
The sector is expected to receive a further boost from the start of gasoline production at Nigerian billionaire Aliko Dangote’s mega-oil refinery in September, and an increase in its processing rate to 420,000 barrels per day, as well as new fields coming online.
The 2025 budget to be presented by President Bola Tinubu on Nov. 27 assumes crude output increasing to 2.06 million barrels a day and an oil price of $75 per barrel, which if achieved, may lift growth to 4.6%.
Agriculture output slowed to 1.1% from 1.4% in the prior three months, after recent floods washed away crops that the United Nations estimates would have fed 8.5 million for six months.
--With assistance from Simbarashe Gumbo and Paul Richardson.
(Updates with more details throughout)
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