Real GDP growth came in below expectations in Q1, showing a slight deceleration to +1.95% y/y from +2.1% in Q4. Oil output was the main growth driver in Q1 (+14.8% y/y), recovering to 2mn bbl/day. But the non-oil sector disappointed (+0.8% y/y in Q1). We attribute this low figure to the delayed process of the 2018 budget which was only approved on 18 May. It gave an unusual seasonality to the Nigerian economy. However, there was a broad recovery of quite cyclical sectors such as cars & assembly (+2.3% y/y), air transport (+10.2%) and cement output (+5.3%) in Q1. Moreover, government spend¬ing is expected to grow by around +24% in 2018 and be a genuine growth driver in H2. As a result, we keep our growth forecast unchanged at +2.5% for 2018 (after +0.7% in 2017). The current global environment is supportive for the Nigerian government. Its crude oil output forecast is quite optimistic (2.3mn bbl/d) but the current oil price surprise (80 USD/bbl) should compensate for any slightly lower output, delivering a positive terms of trade shock.
