According to 2017 International Monetary Fund data, that Nigeria is the 30th-largest economy based on nominal gross domestic product (GDP), which evaluates market prices, and the 23rd-largest economy based on purchasing power parity (PPP), which compares the prices of like consumer goods among countries.
With a population of some 186 million, Nigeria ranks 137th in the world based on nominal GDP per capita and 129th based on GDP by PPP per capita. These measures divide nominal GDP and GDP by PPP by the country’s population.
What should I know about nominal GDP and PPP?Among the multiple ways that economists measure a country’s economic strength, nominal GDP and PPP are two of the most common.
Nominal GDP is based on official government estimates and depends on exchange rates between two countries, typically using the US dollar for one of the denominations. It’s useful for measuring financial flows between countries. But because it doesn’t consider differences in cost of living, it can distort per capita income estimates.
PPP, on the other hand, considers the relative cost of local goods, services and inflation rates — all factors considered to reflect a country’s domestic market. Because PPP compares the costs of a common “basket of goods” — some 3,000 consumer goods that include food, fuel and insurance — it’s considered a more ideal way to project per capita income projections and gauge poverty thresholds.
Nigeria’s official currency is the Nigerian naira (NGN). This currency has recently fluctuated between 360 and 489 NGN against the US dollar.
Industry accounted for almost 26% of Nigeria’s GDP in 2015. Major industries include cement, oil refining, construction and construction materials and food processing.
The petroleum sector accounts for much of the government’s annual revenues. Nigeria is a member of the Organization of Petroleum Exporting Countries (OPEC), possessing significant oil and natural gas reserves. Of the market for Nigeria’s oil, the US accounts for 40% of its exports.
Agriculture accounted for about 18% of GDP in 2015, employing nearly a third of the workforce. Despite its ranking as sixth in the world and first in Africa in terms of farm output, Nigeria imports most of its food because of low agricultural productivity. Cocoa, peanuts, rubber and palm oil are among its major agricultural products.
The services sector accounted for almost 55% of GDP in 2015. Services are helped along by Nigeria’s significantly growing banking sector and tourism.
Remittances from Nigerians abroad to families back home reached $17.9 billion in 2007. Official estimates put the number of Nigerians living abroad at 17.5 million.
As of 2016, an estimated 13.9% of the population was unemployed.
Major contributors to the economy
Nigeria is a member of the World Trade Organization. Top trading partners include India, the Netherlands, Spain and the US, with the US accounting for much of the foreign investment in the country.
The country’s top exports include:
- Mineral fuels, including oil
- Oil seeds
- Raw hides, skins and leather
Nigeria’s main imports include:
- Machines, engines and pumps
- Electronic equipment
Nigeria is Africa’s largest economy and biggest exporter of oil. The country also owns the continent’s largest natural gas reserves and manufacturing sector.
Nigeria’s GDP growth rate averaged 5.7% each year between 2006 and 2016, experiencing a lull into 2017. It’s since experienced a growth trend that’s expected to continue over the next few years.
The country depends on oil exports to power its growth, which heavily contributes to its economy’s volatility. The government is working to lessen its dependence on oil by supporting economic diversification.
Although Nigeria has made substantial progress in terms of socioeconomic development, inequality and poverty rates remain high, particularly in the northern part of the country. To address the problem, the government has embarked on a structural reform program to make development more inclusive and boost job opportunities. Improvements to the country’s road, railways and ports are also underway.