IMF downgrades Nigeria’s economic growth projection

The International Monetary Fund (IMF) has downgraded Nigeria’s economic growth forecast for the year 2023 to 2.9 percent.

This is against its forecast for 2022 which stood at  3.3 percent.

The latest forecasts were contained in the IMF’s World Economic Outlook report, October 2023 released on the sidelines of the ongoing World Bank/IMF Annual Meetings in Marrakesh, Morocco.

“For Nigeria, in particular, we have a growth forecast that goes from 3.3 per cent this year [2022] to 2.9 per cent next year [2023], before going up to 3.1 per cent in 2024. There is a downward revision for this year.”

According to the IMF, “Partly, this is because of the demonetization, the high inflation, and the shocks to agriculture and hydrocarbon output. That is coming on top of those external headwinds,” IMF bemoaned the negative effects of high inflation on consumption of goods and services across the continent of Africa

“Inflation is peaking but is still in double digits for more than 40 per cent of the economies. We see African growth at 3.3, 4 per cent. That’s above the global average, but it’s below the potential that Africa has and that it needs to catch up more quickly toward higher income levels.”

“The shocks hitting growth are diverse, but there are several external ones coming from the higher food and fertilizer prices still from the war in Ukraine; the funding squeeze‑‑harder to get capital; and the still very high spreads, therefore, for several economies; and exchange rate pressures,” the statement also detailed

Despite the downgrade, Head, World Economic Studies Division  of the financial body, Daniel Leigh, expressed optimism in  the proactive measures President Bola Ahmed Tinubu had taken to cushion the effects of the inflation crisis.

“I would also add that President Tinubu has moved quickly with important reforms, including ending the fuel subsidies and unifying the official exchange rate. We welcome these initial bold reforms because we see them as paving the way toward stronger and inclusive growth.

Likewise, the IMF special report, titled, “In Pursuit of Stronger Growth and Resilience called for a cooperative approach to maintain economic stability

“Against this background, Africa’s policymakers should prioritize efforts to boost resilience by ensuring macroeconomic stability and accelerating structural reforms to foster stronger, more inclusive growth.”

“The international community should maintain and enhance a cooperative approach to the provision of global public goods. In the case of Africa,
it is essential to support the region’s most vulnerable climate- and conflict-affected states,” it read.