Yesterday, the International Monetary Fund revised its 2024 economic growth forecast for Nigeria downward to 3.1 percent, citing weaker growth in the first quarter of the year, Q1’24.
This updated forecast was included in the IMF’s World Economic Outlook for July 2024, which was released on Tuesday, July 16, 2024.
The revision is 0.2 percentage points lower than the previous forecast of 3.3 percent.
This adjustment follows the weaker-than-expected GDP growth Nigeria experienced in the first quarter of 2023.
Recall that data from the National Bureau of Statistics (NBS) indicated that Nigeria’s GDP growth decreased quarter-on-quarter to 2.98 percent in Q1’24, down from 3.46 percent in the fourth quarter of 2023, Q4’23.
Following the reduced forecast for Nigeria’s economic growth, the IMF has revised its projection for Sub-Saharan Africa’s economic growth in 2024 downward to 3.7 percent from the previous 3.8 percent forecast in the April WEO. Conversely, it has increased its growth forecast for the region in 2025 to 4.1 percent, up from 4.0 percent.
“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.
For the global economy, the IMF retained its growth forecasts of 3.2 per cent in 2024 and 3.3 per cent in 2025.
The IMF said: “The Global Economy in a Sticky Spot 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.”
Nigeria is enduring sluggish growth, with the National Bureau of Statistics (NBS) recently reporting an inflation rate of 34.19%, signaling a persistent rise.
The Consumer Price Index (CPI) report released by the NBS on Monday underscores this increasing trend: “In June 2024, the headline inflation rate rose to 34.19% compared to May 2024, which was 33.95%. This represents an increase of 0.24 percentage points from the previous month.”
The annual inflation rate for June 2024 saw a significant increase, rising by 11.40 percentage points from June 2023’s rate of 22.79%.
In terms of monthly changes, June 2024’s inflation rate was 2.31%, which is 0.17% higher than the previous month’s rate of 2.14%. This reflects a quicker pace of price increases in June compared to May.
Food prices surge
In June 2024, food prices also saw a substantial rise. The Consumer Price Index (CPI) report indicated that food inflation reached 2.55% for the month, an increase of 0.26% from May 2024’s food inflation rate of 2.28%.
This escalation in food prices has been linked to increased costs for vital commodities such as groundnut oil, palm oil (in the oils and fats category), and various tubers like water yam, cocoyam, and cassava (in the potatoes, yam, and other tubers category), along with different fish types like catfish, croaker, mudfish, and snail (in the fish category).
In response to rising prices of essential goods, the government has announced measures to mitigate the situation. These measures include suspending duties, tariffs, and taxes on the importation of maize, husked brown rice, wheat, and cowpeas through land and sea borders for 150 days.
Furthermore, the government has approved plans for the acquisition of 2,000 tractors and 1,200 trailers, as well as the formation of a committee to tackle the root causes of the food crisis in the country. Experts have identified issues like insecurity and insufficient equipment as significant barriers to food production in Nigeria.
