The Sever cash crunch which precipitated the economy early in the year dragged down the country’s Gross Domestic Product ( GDP) by 2.31 percent in first quarter of 2023 compared to 3.11% recorded in the first quarter of 2022, and 3.52% in the fourth quarter of 2022.
National Bureau of Statistics (NBS) confirmed figure on Wednesday in GDP data for Q1 2023.
The economy reeled under acute pressure following introduction of cashless and naira re- design policies introduced by the Central Bank of Nigeria.
On October 26 2022, CBN announced the introduction of redesigned N200, N500 and N1,000 banknotes into the financial system. According to CBN, the redesigned denominations of N200, N500 and N1,000 naira notes and new limits on large cash withdrawals would help curb money laundering and make digital payments the norm, hence promoting cashless policy in Africa’s biggest economy.
The policy attracted backlash. According to NBS , Gross Domestic Product (GDP) grew by 2.31% (year-on-year) in real terms in the first quarter of 2023.
This growth rate, NBS explained declined from 3.11% recorded in the first quarter of 2022, and 3.52% in the fourth quarter of 2022.
“The reduction in growth is attributed to the adverse effects of the cash crunch experienced during the quarter”.
The performance of the GDP in the first quarter of 2023 was driven mainly by the services sector, which recorded a growth of 4.35% and contributed 57.29% to the aggregate GDP.
The agriculture sector grew by -0.90%, lower than the growth of 3.16% recorded in the first quarter of 2022. Although the growth of the industry sector improved to 0.31% relative to – 6.81% recorded in the first quarter of 2022, agriculture, and the industry sectors contributed less to the aggregate GDP in the quarter under review compared to the first quarter of 2022.