The International Monetary Fund (IMF) has downgraded its 2024 economic growth forecast for Nigeria to 3.1 per cent.
The global lending body cited weaker growth recorded in the first quarter of this year.
The new projection was contained in the July 2024 World Economic Outlook of the IMF released yesterday titled, “The Global Economy in a stick Spot.”
IMF also lauded Nigeria and other Sub-Saharan African countries for tightening their monetary policies. It projected a decline in inflation, suggesting that monetary policy easing may soon be on the horizon.
The Fund further acknowledged Nigeria’s plans to resume cash transfers to vulnerable populations as a commendable effort to shield citizens from numerous economic shocks.
The downgrade represents 0.2 percentage points below the earlier forecast of 3.3 per cent. However, IMF retained its 2025 growth forecast of three per cent.
Also, it followed weaker-than-expected Gross Domestic Product-(GDP) growth recorded by the country in the first- quarter of 2023.
Nigeria has been experiencing weak growth with the latest inflation figure of 33.95 released by the National Bureau of Statistics (NBS), revealing no end in sight.
To worsen the concerns, macroeconomic indicators like the high cost of transportation, insecurity in Nigeria’s food belt, and high energy costs have continued to slow down growth.
The IMF, however, retained its 3.0 percent forecast for Nigeria’s economic growth in 2025.
As a result of the lower forecast for Nigeria’s economic growth, the IMF also downgraded its forecast for Sub-Saharan economic growth in 2024 to 3.7 percent from the April WEO forecast of 3.8 per cent.
The Fund however, raised the economic growth forecast for the region in 2025 to 4.1 percent from 4.0.
“The forecast for growth in sub-Saharan Africa is revised downward, mainly as a result of a 0.2 percentage point downward revision to the growth outlook in Nigeria amid weaker than expected activity in the first quarter of this year,” the IMF said.
It said the global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 per cent in 2024 and 3.3 per cent in 2025. However, varied momentum in activity at the turn of the year has somewhat narrowed the output divergence across economies as cyclical factors wane and activity becomes better aligned with its potential.
“Services price inflation is holding up progress on disinflation, which is complicating monetary policy normalization. Upside risks to inflation have thus increased, raising the prospect of higher-for-even-longer interest rates, in the context of escalating trade tensions and increased policy uncertainty. To manage these risks and preserve growth, the policy mix should be sequenced carefully to achieve price stability and replenish diminished buffers,” the Fund said.
Speaking at the virtual press briefing to unveil the report, Chief Economist and Director, Research Department, IMF, Pierre-Olivier Gourinchas, said, “The growth projections for 2024 are revised downwards a little bit to 3.7 per cent, that’s and negative 0.1 percentage point revision and unchanged for 2025 at 4.1 per cent.
“And the broad context here is that as we see inflation increasingly in the rear-view mirror and we expect to see inflation in the rear-view mirror, there is going to be an easing of global monetary conditions and financial conditions and that is going to benefit also the region.”
Gourinchas reiterated that monetary conditions were expected to ease and inflation would be brought under control.
He stated, “The context is challenging for many countries in the region because of the funding squeeze that I mentioned already that is affecting a number of countries, especially in Sub-Saharan Africa.
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