In a recent update to the World Economic Outlook for January 2024, the International Monetary Fund (IMF) has revised Nigeria’s economic growth forecast for the year, lowering it from the previously projected 3.1 percent in October 2023 to 3 percent.
The report, titled “Moderating Inflation and Safety Growth Open Path to Soft Landing,” was released on yesterday, Tuesday.
The IMF also projected a 3.1 percent economic growth for Nigeria in 2025. Additionally, the outlook revealed a downward revision for sub-Saharan Africa’s growth from 4 percent to 3.8 percent for 2024.
According to the IMF, the revision is primarily attributed to a weaker projection for South Africa due to increasing logistical constraints, including those in the transportation sector, affecting economic activity.
While unveiling the report, the organization increased the global growth forecast by 0.2 percent to 3.1 percent for the current year, with a modest rise to 3.2 percent expected in 2025.
Notably, the IMF highlighted upgrades for China, the United States, and large emerging markets as contributing factors to the positive adjustment.
Despite the positive global growth adjustment, the IMF noted that the projections for 2024 and 2025 remain below the historical annual average of 3.8 percent, citing restrictive monetary policies, withdrawal of fiscal support, and low underlying productivity growth.
Advanced economies are expected to experience a slight decline in growth in 2024 before a recovery in 2025, while emerging market and developing economies are projected to maintain stable growth.
On the inflation front, the IMF notes that it anticipates a decrease in global headline rise from an estimated 6.8 percent in 2023 to 5.8 percent in 2024 and further to 4.4 percent in 2025.
Advanced economies are expected to witness faster disinflation, with a notable decline in inflation, while emerging market and developing economies are projected to experience a more modest decrease.
The IMF emphasized the importance of central banks delivering a smooth landing in the face of varying inflation drivers across economies. It also highlighted the need for fiscal consolidation in many cases, given rising debt and limited budgetary flexibility.
The organization recommended intensified supply-enhancing reforms to facilitate both inflation and debt reduction and enable a sustainable improvement in living standards.
