NBS to rebase Nigeria’s GDP and CPI to reflect economic accuracy and structural changes

Sectoral Shifts in GDP Contribution

After rebasing, crop production, trade, and real estate will emerge as the largest contributors to Nigeria’s GDP. while Telecommunications, crude petroleum and natural gas, construction, and food, beverages, and tobacco make up the top seven.

Notably, crude petroleum and natural gas have been displaced by real estate, moving from third to fifth in economic contribution. Construction has entered the top seven, while public administration has been removed from this list.

CPI Enhancements

Alongside the traditional headline, core, and food inflation indices, three new indices will be introduced:

• Services Index: To track price increases in services like education and transport.
• Energy Index: To monitor price fluctuations in the energy sector.
• Farm Produce Index: To gauge price volatility and changes in agricultural products.

This will allow for a more detailed understanding of inflation across various sectors of the economy.

Inflation Reporting

The NBS plans to release two inflation reports in January 2025, the December 2024 CPI and the newly rebased CPI. This was confirmed by Dr. Ayo Andrew, Head of Price Statistics at NBS, despite earlier concerns about the inaccessibility of the NBS website.

Dr. Andrew clarified that rebasing does not inherently dictate inflation trends but aims to capture current economic conditions more accurately, which could influence monetary policy decisions.

Policy and Economic Planning

The rebased data will serve as a foundation for better-informed economic and development planning. It will help in understanding the growth trajectory and in adjusting policies according to new economic realities, especially in sectors like digital economy, modular refineries, pension fund administration, national health insurance, and mining.

Debating NBS Methodologies

The choice of base year for both GDP and CPI has sparked controversy. For GDP, selecting 2019 is seen as reasonable due to its stability. But for CPI, moving the price reference to 2024, a year of peak inflation, raises concerns about artificially lowering inflation figures, potentially misleading stakeholders.

Public perception of inflation is another critical issue. Critics argue that the methodology could create a disconnect between official statistics and the economic hardship experienced by Nigerians. This could lead to distrust in official data and misguided policy decisions.

The inclusion of certain sectors in GDP calculations is also contentious, such as illegal activities, citing moral and practical issues. This could distort the true picture of economic health and potentially legitimize unlawful practices.

This comprehensive approach to economic measurement can enhance investor confidence by offering a clearer, more up-to-date picture of economic health, which is crucial for both domestic and international stakeholders. Ultimately, these updates are intended to ensure that economic data accurately informs decisions, from government policy to private sector investments, reflecting Nigeria’s evolving economic landscape.