LAGOS- Nigeria's economy grew by 3.98% in the fourth quarter, the statistics office said on Thursday, easing from the previous quarter as lower crude production offset gains from higher oil prices.

It was the fifth consecutive quarter of economic growth in Africa's most populous country following a recession brought on by the coronavirus pandemic. Full-year growth stood at 3.40% in 2021, the National Bureau of Statistics said.

Nigeria had been grappling with low growth even before the pandemic. The lockdowns then caused a sharp fall in global oil prices that created large financing gaps for the West African country, including dollar shortages and inflation.

Simon Harry, head of Nigeria's statistics office, said fourth-quarter growth was higher than the previous quarter in nominal terms but base effects or the effects of the lower comparative period weighed on the data.

He told reporters that air transport, coal mining and other minerals grew fastest while other mining, financial and insurance sectors also showed strong growth.

"Oil refining dragged down growth. The poor performance of oil was due to operational challenges and insecurity coming from pipeline vandalism," said Harry.

Nigeria has suffered from regular vandalism on its oil pipelines and from illegal refining in the Niger Delta. Despite a recovery in oil prices, Nigeria has struggled to meet its production targets.

Oil production stood at 1.50 million barrels per day in the final quarter of 2021, compared with 1.56 million recorded during the same period the previous year, Harry said.

The oil sector contracted by 8.06% in the fourth quarter, less than the third quarter. That comparatively better performance helped to counter the effect of a decline in growth by 0.71 percentage point to 4.73% in the non-oil sector during the period.

"We think that growth will drop back over the coming quarters as favourable base effects fade and oil sector woes persist," said Virag Forizs, emerging market economist at Capital Economics said.

(Reporting by Chijioke Ohuocha; writing by MacDonald Dzirutwe, editing by John Stonestreet, Gareth Jones and Andrew Heavens) ((macdonald.dzirutwe@thomsonreuters.com; Reuters Messaging: macdonald.dzirutwe.thomsonreuters.com@reuters.net))