The International Monetary Fund (IMF) expects the country’s growth to slow in 2024.
This is according to the latest World Economic Outlook (WEO) report released on Tuesday.
According to the report, the Nigerian economy is currently expected to grow at 2.9% in 2024, maintaining the same growth pace recorded in 2023.
The latest forecast is a 0.2% decrease from the previous forecast in July, and a 0.4% decrease from the previous forecast in April.
“The revisions reflect slower growth in Nigeria amid weaker-than-expected economic activity in the first half of this year,” the international financial institution said.
Jean-Marc Natal, IMF Deputy Director for Research, also elaborated on Nigeria’s growth challenges, highlighting disruptions to agriculture and oil production as key drivers of revised growth forecasts.
He made the remarks at a press conference on Tuesday to present the World Economic Outlook at the IMF/World Bank Annual Meeting in Washington, DC.
“We have revised down Nigeria’s growth rate for 2024 by 0.2%. The reason for the revision is precisely the agricultural issues related to flooding and oil production issues related to safety and maintenance that are holding down oil production,” Natal said. So things are unstable. So these two factors play a role.”
However, the IMF also noted that its growth forecast for 2025 is 3.2%, 0.2% higher than the forecasts made in July and April this year.
What you need to know
The IMF’s projections for 2024 and 2025 are much lower than the World Bank’s projections.
The latest edition of the World Bank’s recent report, Africa’s Pulse, predicts that Nigeria’s gross domestic product (GDP) will expand by 3.3% in 2024, accelerating slightly to 3.6% in 2025-2026. are.
“Nigeria’s economic growth rate is projected to be 3.3% in 2024 and 3.6% in 2025-2026, as macroeconomic and fiscal reforms are gradually beginning to bear fruit,” the report said. It’s dark. Inflation peaked in June 2024 (34.2% year-on-year), slowed to 33.4% in July, and further decelerated to 32.2% in August. ”
However, Nigeria’s inflation rate is expected to decline from an average of 32.55% in 2024 to 25% by 2025, according to the IMF.
In a press conference, the IMF further urged countries facing high inflation, including Nigeria, to adopt tight monetary policies to stabilize their economies.
Pierre-Olivier Grinchat, Economic Advisor and Director of Research at the IMF, emphasized the need to balance monetary and fiscal policy to tackle the challenges of inflation and debt.
“In countries with very high inflation rates, we recommend a tightening monetary stance. In some cases, fiscal consolidation can be helpful where possible, but this is complicated by the trade-offs faced by many countries. It will be.”
Mr. Grinchas also emphasized the importance of balancing spending, which is essential for fiscal consolidation and promoting growth.
He warned that too much austerity could hamper economic recovery efforts.
“Trying to do too much too quickly can hurt growth, and most countries have important needs in terms of spending, including essential services, health and public services,” he said. Therefore, we need to be careful.” investment. ”
“We need to protect spending that leads to growth,” he added.
Nigeria’s economy grew by 2.98% and 3.19% in the first and second quarters of this year, respectively, amid soaring inflation and further depreciation of the naira.
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