Nigeria’s Economic Growth will slow to 2.9% because of inflation – IMF

NIGERIA, Oct. 11 – The International Monetary Fund (IMF), has predicted that inflation will slow Nigeria’s economic growth to 2.9 % in 2023.

It also downgraded the country’s economic growth prospect by 0.3 percentage points to 2.9 % for 2023 following weaker oil and gas production.

The IMF disclosed this in its new World Economic Outlook (for October) themed, ‘Navigating Global Divergences,’ released on Tuesday. Earlier in July, the lender projected that Nigeria’s economy would grow by 3.2 % in 2023. Then, it predicted that growth in the country would be impacted by security issues in the oil sector.

Commenting on its new prediction for the country, the Washington-based lender said, “Growth in Nigeria is projected to decline from 3.3 t% in 2022 to 2.9 % in 2023 and 3.1% in 2024, with negative effects of high inflation on consumption taking hold.

“The forecast for 2023 is revised downward by 0.3 percentage point, reflecting weaker oil and gas production than expected, partially as a result of maintenance work.”

According to the National Bureau of Statistics, Nigeria’s GDP grew by 2.51 % in the second quarter of 2023.  In August, Inflation surged to 25.80 %, an 18 year high, according to figures from the NBS.

Growth in the sub-Saharan African region is expected to decline to 3.3 % in 2023 due to worsening weather shocks, the global slowdown, and domestic supply issues, the IMF noted.

It, however, stated that this growth will pick up by 2024 to 4.0 % in 2024, which is still below the region’s historical average of 4.8 %.

Overall, global economic growth is projected to slow from 3.5 per cent in 2022 to 3.0 % in 2023 and 2.9 % in 2024, well below the historical (2000–19) average of 3.8 %, the IMF declared.

It added, “Advanced economies are expected to slow from 2.6 % in 2022 to 1.5 per cent in 2023 and 1.4 % in 2024 as policy tightening starts to bite. Emerging market and developing economies are projected to have a modest decline in growth from 4.1 % in 2022 to 4.0 % in both 2023 and 2024.”

Inflation, which has been on a global rise, is expected to fall from 8.7 % in 2022 to 6.9 % in 2023 and 5.8 % in 2024, the IMF highlighted. It further stated that low-income developing countries are expected to experience double digits inflation in 2023.

Commenting on a question regarding Nigeria at Marrakech, Morocco, the head of the World Economic Studies division in the IMF’s Research Department, Daniel Leigh, highlighted that the downward review in Nigeria is due to the recent demonetisation move of the government, high inflation, and more.

Leigh, who heads the department that produces the World Economic Outlook, said, “There is a downward revision for this year, partially this is due to the demonetisation, high inflation, shocks to agriculture and hydrocarbon output that is coming on top of the external headwinds.

“I will also add that President Tinubu has moved quickly with important reforms including ending the fuel subsidy and unifying the exchange rates. We welcome these initial bold reforms because we see them as paving the way for strong and inclusive growth.”