IMF Raises Nigeria’s 2024 Growth Forecast to 3.3%, Says Country On Path To Rein In Inflation

The International Monetary Fund (IMF) on Tuesday raised Nigeria’s 2024 economic growth forecast from the three per cent it had previously estimated, to 3.3 percent. The Washington-based institution, however, revised downwards the country’s 2025 growth projection from 3.1 per cent to three per cent.

The fund also stated that 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 percent next year and then 18 percent in 2026.

The IMF made the projection 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.

In a separate press briefing for G-24 finance ministers, Minister of Finance and Coordinating Minister of the Economy, Mr. Olawale Edun, called for more concessional debt, saying such support is vital for Nigeria in alleviating exchange rate pressures.

The IMF report titled, “Steady but Slow: Resilience amid Dive,” also stated that in sub-Saharan Africa (SSA), it was anticipated that growth would increase from approximately 3.4 percent in 2023, to 3.8 percent in 2024 and further to four 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.

On Nigeria and SSA’s growth prospects, IMF stated, “In sub-Saharan Africa, growth is projected to rise from an estimated 3.4 percent in 2023 to 3.8 percent in 2024 and four percent 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.”

Equally speaking on Nigeria at the WEO media briefing, Division Chief, Research Department, IMF, Daniel Leigh, noted that Nigeria’s economic growth was showing positive signs, with a rise from 2.9 percent last year to 3.3 percent this year, driven by the recovering oil sector and improved agriculture.

However, 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.

Nevertheless, Leigh foresaw that with tight 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.

 Leigh said, “Growth on Nigeria is steady but actually rising this year from 2.9 percent last year to 3.3 percent 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 percent.

“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 percent in 2026. So, it is in the right direction definitely.”

Edun, who was represented by Director-General, Budget Office of the Federation, Ben Akabueze, at the G-24 Ministers press briefing, stated that the Nigerian economy was steering in the right direction with the recent policies being undertaken by the present government.

Responding to a question on Nigeria’s debt stance and how to manage it sustainably, he said, “For Nigeria, we faced fiscal challenges but most significantly by getting debt sustainable and at the same time increasing fiscal space for our ever-increasing burden of public expenditure, especially with sustained high population growth.

“So, the most important support that Nigeria requires at this time is investment and increased trade. While Official Development Assistance (ODA) is helpful at the end of the day, that’s not what’s going to sustainably address the scale of Nigeria’s problems.

“There is a lot of investment opportunities, especially in areas like infrastructure. At the same time, of course, concessionary debt and support still remain important for the country, especially foreign currency-denominated for one it helps also with addressing the foreign currency supply situation that puts pressure on the exchange rate.”

Edun added, “You can see inflation is high and is being tackled, we see inflation beginning to basically peak and we can see a reversing trend towards the second half of this year.

“The exchange rate is stabilised now, we have seen basically the parallel and the foreign exchange market rates merge. I think that all of these are inspiring greater confidence in investors, whether it be portfolio investors, foreign direct investors, and even domestic investors as well.”

Nume Ekeghe and Dike Onwuamaeze

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