The International Monetary Fund (IMF) has revised its forecast for Nigeria’s economic growth in 2024 downwards to 3.1 per cent.
This adjustment, detailed in the IMF’s July 2024 World Economic Outlook report released on Tuesday, reflects a reduction from the previous forecast of 3.3 per cent, driven by weaker-than-expected economic performance in the first quarter of the year (Q1’24).
The downgrade was prompted by Nigeria’s Gross Domestic Product (GDP) growth, which fell short of expectations.
Data from the National Bureau of Statistics (NBS) indicated that Nigeria’s GDP growth rate declined quarter-on-quarter (QoQ) to 2.98 per cent in Q1’24, compared to 3.46 per cent in the fourth quarter of 2023 (Q4’23).
Despite this, the IMF maintained its 3.0 per cent growth forecast for Nigeria in 2025.
Reflecting on the broader regional impact, the IMF also downgraded its forecast for Sub-Saharan Africa’s economic growth in 2024 to 3.7 per cent from the 3.8 per cent predicted in April.
However, it slightly raised the region’s growth forecast for 2025 to 4.1 per cent from 4.0 per cent.
The IMF attributed the regional downgrade primarily to the revised growth outlook for Nigeria, citing weaker-than-expected activity in the first quarter of 2024.
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Globally, the IMF retained its growth forecasts of 3.2 per cent for 2024 and 3.3 per cent for 2025.
The report highlighted that while global growth projections remain consistent with the April 2024 World Economic Outlook, varied momentum in economic activity has narrowed output divergence across economies.
The IMF noted that persistent services price inflation is hindering disinflation efforts, complicating the normalization of monetary policy.
Consequently, there is an increased risk of prolonged higher interest rates amidst escalating trade tensions and policy uncertainty.
To manage these risks and sustain growth, the IMF emphasized the need for a carefully sequenced policy mix aimed at achieving price stability and replenishing diminished economic buffers.
This development comes as Nigeria grapples with rising inflation.
According to the latest NBS data, Nigeria’s inflation rate reached a new high of 34.19 per cent in June 2024, up from 33.95 per cent in May 2024.
The NBS’s Consumer Price Index (CPI) report for June 2024 indicated a 0.24 per cent increase in the headline inflation rate compared to May 2024, and an 11.40 percentage point increase compared to June 2023’s rate of 22.79 per cent.
Month-on-month, the headline inflation rate in June 2024 was 2.31 per cent, marking a 0.17 per cent rise from the rate recorded in May 2024 (2.14 per cent), indicating a higher rate of price increase in June 2024 compared to the previous month.
