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The International Monetary Fund yesterday downgraded its forecast for Nigeria’s economic growth in 2024 to 3.1 per cent citing weaker growth recorded in the first quarter of the year, Q1’24.
The new forecast was contained in the July 2024 World Economic Outlook of the IMF released Tuesday, July 16, 2024.
The downgrade represents 0.2 percentage points below the earlier forecast of 3.3 percent.
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Also, it followed weaker-than-expected gross domestic product-(GDP) growth recorded by the country in the first- quarter of 2023.
It would be recalled that Data from the National Bureau of Statistics (NBS), showed that Nigeria’s Gross Domestic Product (GDP), growth dropped, quarter-on-quarter, QoQ to 2.98 per cent in Q1’24 from 3.46 per cent in the fourth quarter of 2023, Q3’23.
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 per cent from the April WEO forecast of 3.8 per cent. It however raised its economic growth forecast for the region in 2025 to 4.1 per cent from 4.0.
“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.
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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 has been experiencing weak growth with the latest inflation figure of 34.19 released by the National Bureau of Statistics (NBS), revealing no end in sight
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The NBS’s Consumer Price Index (CPI) released on Monday highlighted the upward 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.”
Year-on-year, the headline inflation rate for June 2024 was significantly higher, up by 11.40 percentage points compared to June 2023, which stood at 22.79%.
On a month-on-month basis, inflation in June 2024 was 2.31%, up by 0.17% from May 2024, when it was 2.14%. This indicates a faster rate of price increase in June compared to May.
Food prices soar
Food prices also experienced a notable increase in June 2024. According to the CPI report, food inflation for the month was 2.55%, up by 0.26% from May 2024, which recorded 2.28% food inflation.
The rise in food prices was attributed to higher costs for essential items such as groundnut oil, palm oil (oil & fats category), tubers like water yam, cocoyam, cassava (potatoes, yam & other tubers category), and various types of fish including catfish, croaker, mudfish, and snail (fish category).
Government’s effort against the food crisis
In response to the escalating prices of basic goods, the government recently announced measures to alleviate the situation.
These include the suspension of duties, tariffs, and taxes on the importation of maize, husked brown rice, wheat, and cowpeas through land and sea borders for 150 days.
Additionally, plans were approved for the procurement of 2,000 tractors and 1,200 trailers, alongside the establishment of a committee to address the underlying causes of the food crisis in the country.
Experts have pointed to factors such as insecurity and inadequate equipment as major impediments to food production in Nigeria.
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