Economy
IMF Forecasts 3.3% GDP Growth, 23.6% Inflation for Nigeria in 2024
By Adedapo Adesanya
The International Monetary Fund (IMF) has raised Nigeria’s 2024 economic growth forecast from the 3 per cent it had previously estimated to 3.3 per cent while it expects inflation to moderate to 26.3 per cent.
The Washington-based institution, however, revised downwards the country’s 2025 growth projection from 3.1 per cent to 3 per cent.
The fund also stated that the Central Bank of Nigeria (CBN), through its heightened increase in the monetary policy rate, was on the path to rein inflation, as it projected inflation to decline to 23 per cent next year and then 18 per cent in 2026.
The IMF projected in its latest World Economic Outlook (WEO) released on Tuesday at the ongoing hybrid spring meetings in collaboration with the World Bank, in Washington DC.
The IMF report titled Steady but Slow: Resilience Amid Dive also stated that in sub-Saharan Africa (SSA), it anticipated that growth would increase from approximately 3.4 per cent in 2023, to 3.8 per cent in 2024 and further to 4 per cent in 2025.
That optimistic outlook stemmed from the gradual alleviation of adverse impacts from previous weather disturbances and the gradual resolution of supply challenges.
The growth forecast for SSA in 2024 remained consistent with the January 2024 WEO Update.
IMF stated, “In sub-Saharan Africa, growth is projected to rise from an estimated 3.4 per cent in 2023 to 3.8 per cent in 2024 and four per cent in 2025, as the negative effects of earlier weather shocks subside and supply issues gradually improve.”
The forecast was unchanged for 2024, from the January 2024 WEO Update, as a “downward revision to Angola owing to a contraction in the oil sector is broadly offset by an upward revision to Nigeria.”
Speaking on Nigeria at the WEO media briefing, Division Chief, Research Department, IMF, Mr Daniel Leigh, noted that Nigeria’s economic growth was showing positive signs, with a rise from 2.9 per cent last year to 3.3 per cent this year, driven by the recovering oil sector and improved agriculture.
Mr Leigh stated that inflation had increased due to various factors, including reforms and exchange rate fluctuations. He said reforms were prompting a revision of the inflation projection for this year to 26 per cent.
He noted that with tighter monetary policies and significant interest rate increases, inflation was expected to decline to 23 per cent next year, and further to 18 per cent by 2026, indicating a favourable trajectory for the economy.
“Growth in Nigeria is steady but rising this year from 2.9 per cent last year to 3.3 per cent this year. We have seen an expansion from the recovering oil sector with a better security situation and also improved agriculture benefiting from the better weather conditions and the introduction of dry season farming.
“So there is a broad-based increase also in the financial sector and the IT sector. Inflation has increased, part of this reflects the reforms and the exchange rate and it has passed from imports to other goods. This explains also why we revised our inflation projection for this year to 26 per cent.
“But with the tight monetary policies and the interest rate policy increase and significant interest rate in February and March, we see inflation declining to 23 per cent next year and then 18 per cent in 2026. So, it is in the right direction.”
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the south for the fourth consecutive session after it shed 1.18 per cent on Friday, March 13.
The unlisted securities market recorded a loss despite closing without a price decliner, and ending with two price gainers led by Geo Fluids Plc, which gained 1o Kobo to sell at N3.10 per share compared with the previous day’s N3.00 per share. Industrial and General Insurance (IGI) Plc appreciated during the session by 2 Kobo to trade at 54 Kobo per unit versus Thursday’s closing price of 52 Kobo per unit.
When the market closed for the day, the market capitalisation lost N29.83 billion to close at N2.489 trillion compared with the N2.519 trillion it finished a day earlier, and the NASD Unlisted Security Index (NSI) crashed by 49.84 points to 4,160.46 points from 4,210.31 points.
Market activity improved yesterday, as the volume of transactions rose 179.5 per cent to 10.4 million units from 3.7 million units, but the value of trades declined by 68.4 per cent to N29.9 million from N95.0 million, while the number of deals weakened by 11.5 per cent to 46 deals from 52 deals.
Central Securities Clearing Systems (CSCS) Plc remained the most active stock by value on a year-to-date basis with 38.4 million units worth N2.4 billion, Okitipupa Plc followed with 6.4 million units traded at N1.1 billion, and FrieslandCampina Wamco Nigeria Plc transacted 6.3 million units for N584.3 million.
Resourcery Plc ended the trading session as the most traded stock by volume on a year-to-date basis with 1.1 billion units valued at N415.6 million, trailed by Geo-Fluids Plc with 130.8 million units valued at N504.5 million, and CSCS Plc with 38.4 million units worth N2.4 billion.
By Adedapo Adesanya
The Naira continued to claw back some gains against the Dollar in the different segments of the foreign exchange (FX) market, as its value was strengthened on Friday.
In the black market, it gained N10 against the United States Dollar yesterday to close at N1,400/$1 compared with the preceding day’s rate of N1,410/$1, and at the GTBank forex counter, it chalked up N6 to close at N1,385/$1, in contrast to the N1,391/$1 it was traded a day earlier.
Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEX), it appreciated against the greenback during the session by N5.28 or 0.38 per cent to quote at N1,366.23/$1 versus Thursday’s closing price of N1,371.51/$1.
It also improved its value against the Pound Sterling in the official market on Friday by N21.81 to settle at N1,812.99/£1 compared with the previous day’s N1,834.80/£1, and gained N13.86 against the Euro to sell at N1,568.03/€1 versus N1,581.89/€1.
Pressure eased further on the FX market as the Central Bank of Nigeria (CBN) continued interventionist operations this week, selling Dollars to banks to boost liquidity after a $500 million boost last week.
This was complemented by inflows from foreign investors, exporters and non-bank corporates, among others, while Nigeria’s gross external reserves remained above $50 billion, the highest since 2009.
The Governor of the apex bank, Mr Yemi Cardoso, also eased fears of a Naira devaluation, saying the country’s financial system has been strengthened by reforms.
Regardless, external pressure looms as the US Dollar strengthened globally due to its war with Iran, now ongoing for three weeks.
Meanwhile, the cryptocurrency market was largely down as traders and investors continue to align with current realities.
The market is adapting to the conflict in real time. Early in the war, every headline produced an outsized reaction because nobody could price the tail risk. Now, traders have a framework where strikes happen, oil spikes and bitcoin dips only to recover again.
Cardano (ADA) depreciated by 3.8 per cent to $0.2623, Dogecoin (DOGE) lost 1.7 per cent to finish at $0.0948, Ripple (XRP) slumped 1.5 per cent to $1.39, Solana (SOL) dropped 1.4 per cent to sell for $87.33, Binance Coin (BNB) went down by 1.3 per cent to $653.58, Bitcoin (BTC) declined by 1.1 per cent to $70,670.63, and Ethereum (ETH) decreased by 0.9 per cent to $2,078.78.
However, TRON (TRX) appreciated by 1.7 per cent to $0.2941, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
The price of the major crude oil grade, Brent crude oil, closed above $100 on Friday for the second consecutive session, as the Iran war heads toward its third week, with oil tanker traffic through the Strait of Hormuz still effectively at a standstill.
It gained 2.67 per cent or $2.68 during the trading day to close at $103.14 per barrel, while the US West Texas Intermediate (WTI) crude oil grade appreciated by 3.11 per cent or $2.98 to settle at $98.71 per barrel.
Brent futures were up about 10 per cent for the week following the 27 per cent rise seen last week, which marked the biggest weekly gain in oil prices since the COVID-19 pandemic in 2020. WTI futures, which saw their best week since 1983 last week, ended the week more than 8 per cent higher.
US President Donald Trump said American forces launched a major bombing raid on Iran’s strategic Kharg Island, targeting military facilities on the key Persian Gulf outpost while warning Iran that its vital oil infrastructure could be destroyed if shipping in the Strait of Hormuz is disrupted.
The terminal accounts for roughly 90 per cent of Iranian crude shipments, loading millions of barrels per day onto tankers bound largely for Asian markets.
The US and Israel’s strikes in the conflict have largely targeted Iranian military and nuclear infrastructure. Oil facilities elsewhere in Iran have been hit, but Kharg’s massive storage tanks, jetties, and pipelines had remained untouched until the latest strike.
Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting in a message delivered via state television.
There have been a number of attacks on foreign ships in or near the Strait, feeding into concerns that a prolonged war could translate to a global economic shock.
Prices are rising despite the US and its allies rolling out some measures to keep a lid on energy costs.
The International Energy Agency (IEA) has agreed to release 400 million stockpiled barrels, the largest such action in history.
The US has issued a 30-day waiver for India to purchase sanctioned oil from Russia. President Donald Trump is considering loosening rules under the Jones Act that require American ships to transport goods between domestic ports, including oil and gas, in an effort to lower costs.
Traders are continuing to monitor developments in the Middle East.
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