IMF Forecasts 3.3% GDP Growth, 23.6% Inflation for Nigeria in 2024

April 17, 2024
IMF Extended Credit Facility

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.”

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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