IMF Tempers Nigerian Growth Hopes, Downgrades 2024 Forecast

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The International Monetary Fund (IMF) has dealt a slightly dampening blow to Nigerian economic ambitions, revising its projected growth for 2024 downwards from 3.1% to 3.0%. This adjusted outlook, outlined in its “World Economic Outlook Update, January 2024,” released on Tuesday, reflects a cautious assessment of the country’s economic trajectory.

While acknowledging a modest expansion of 2.8% in 2023, slightly below its previous estimate of 2.9%, the IMF paints a slightly less optimistic picture for the coming year. The revised 2024 projection falls short of the Nigerian government’s own target of 3.76%. However, the IMF offers a glimmer of hope with a forecast of a rebound to 3.1% growth in 2025.

It said, “In sub-Saharan Africa, growth is projected to rise from an estimated 3.3 per cent in 2023 to 3.8 per cent in 2024 and 4.1 per cent in 2025, as the negative effects of earlier weather shocks subside, and supply issues gradually improve.

“The downward revision for 2024 of 0.2 percentage point from October 2023 mainly reflects a weaker projection for South Africa on account of increasing logistical constraints, including those in the transportation sector, on economic activity.”

Several factors appear to underlie the IMF’s lowered expectations. Global slowdown concerns, ongoing supply chain disruptions, and the uncertain international oil market all cast a shadow on Nigeria’s economic prospects. Domestic challenges such as persistent inflation and infrastructure gaps further contribute to the cautious outlook.

The discrepancy between the IMF’s and the Nigerian government’s projections highlights the divergent perspectives on the country’s near-term economic future. While the government remains optimistic about its policy measures and their potential to spur growth, the IMF underscores the need for continued fiscal prudence and structural reforms to navigate the headwinds and unlock Nigeria’s economic potential.