IMF downgrades its forecast on Nigeria's economic growth for 2024 to 3.1%

INTERNATIONAL Monetary Fund (IMF) officials have downgraded their forecast for Nigeria’s economic growth in 2024 to 3.1% from earlier predictions of 3.3% citing weaker economic activity during the first quarter of the year.

According to the IMF, there was a reduction in growth during the first quarter of 2024, which will end up affecting the annual total.  This new forecast was contained in the July 2024 World Economic Outlook of the IMF, which was released yesterday.

It represents 0.2 percentage points below the earlier forecast of 3.3% and follows weaker-than-expected gross domestic product (GDP) and lesser growth recorded by the country in when compared with the first quarter of 2023. However, the IMF retained its 3% forecast for Nigeria’s economic growth for 2025.

Recent data from the National Bureau of Statistics (NBS), showed that Nigeria’s GDP growth dropped, quarter-on-quarter to 2.98% during the first quarter of 2024 from 3.46% during the fourth quarter of 2023. As a result of the lower forecast for Nigeria’s economic growth, the IMF also downgraded its forecast for sub-Saharan economic growth in 2024 to 3.7% from its April forecast of 3.8%.

 However, the IMF raised its economic growth forecast for the whole of the African continent in 2025 to 4.1% from 4%. An IMF spokesman said: “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.”

For the global economy, the IMF retained its growth forecasts of 3.2% in 2024 and 3.3% in 2025. The IMF spokesman said: “Global economic growth in a sticky spot is projected to be in line with the April 2024 World Economic Outlook forecast, at 3.2% in 2024 and 3.3% 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 normalisation.

"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.”