Marrakech, Morocco || In a recent update, the International Monetary Fund (IMF) has lowered its economic growth projection for Nigeria from the previously estimated 3.2 percent in April to 2.9 percent. The downward revision is attributed to various factors, including the effects of demonetization, high inflationary pressures, and unexpected shocks in agriculture and hydrocarbons.
However, there is a glimmer of hope as the economy is expected to show slight improvement in 2024, with a projected growth rate of 3.1 percent. This optimism is rooted in the anticipated positive impact of President Tinubu’s recent reforms.
These developments were revealed in the IMF’s latest World Economic Outlook (WEO), presented during the 2023 Annual Meetings of the IMF and World Bank, currently taking place in Marrakech, Morocco.
During a press briefing, Daniel Leigh, Division Chief of the IMF’s Research Department, explained that the downward revision for Nigeria’s economy can be attributed to several factors, including the effects of demonetization, high inflation, and shocks in key sectors like agriculture and hydrocarbons. However, he expressed optimism regarding the reforms initiated by President Tinubu’s administration, particularly in terms of energy subsidy removal and exchange rate unification, which could potentially boost economic growth in the upcoming year.
Meanwhile, the global economic outlook shows a decline in growth, with an expected decrease from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024, falling below the historical average of 3.8 percent for the years 2000-2019.
Pierre-Oliver Gourinchas, Chief Economist and Director of the Research Department at the IMF, highlighted that advanced economies are anticipated to slow down from 2.6 percent growth in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy adjustments begin to have an impact. In contrast, emerging market and developing economies are expected to experience a modest reduction in growth from 4.1 percent in 2022 to 4.0 percent in both 2023 and 2024.
Furthermore, the IMF’s report indicates a gradual decline in global inflation, decreasing from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024, largely due to tighter monetary policies and lower international commodity prices. However, core inflation is expected to decline at a slower rate, with a return to target levels projected for most cases by 2025.
These economic insights provide a comprehensive overview of the challenges and prospects that lie ahead for Nigeria and the global economy, setting the stage for informed economic policy decisions.
