The International Monetary Fund (IMF) has lowered Nigeria’s growth forecasts due to challenges such as low crude oil production and severe flooding affecting the economy.
“Nigeria’s economy in the first and second quarter of the year grew by 2.98% and 3.19% respectively amid a surge in inflation and further depreciation of the naira.
“The GDP growth rate in the first two quarters of 2024 surpassed the figure for 2023, representing resilience despite severe macroeconomic shocks with a spike in petrol prices and a 28-year high inflation rate.
“Nigeria’s inflation rate only began to slow down in July 2024 after 19 months of consistent increase dating back to January 2023.
“However, after two months of slowdown hiatus, inflation continued to rise on the back of an increase in petrol prices by the NNPCL in September,” the report said.
In discussing the report, the IMF cited two primary reasons for its downward revision: significant agricultural disruptions due to severe flooding and security and maintenance issues affecting oil production.
Jean-Marc Natal, the division chief in the IMF’s Research Department, noted that these challenges were crucial factors in the revision.
Natal said: “There has been, over the last year and a half, some progress in the region. You saw, inflation stabilising in some countries, going down even and reaching a level close to the target. So, half of them are still at a large distance from the target, and a third of them are still having double-digit inflation.
“In terms of growth, it’s quite uneven, but it remains too low. The other issue is that in the region it is still high. It has stopped increasing, and in some countries already starting to consolidate, but it’s still too high, and the debt service is, correspondingly, still high in the region.”
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In a separate briefing for the Global Financial Stability Report, Jason Wu, Assistant Director of the Monetary and Capital Markets Departments, emphasized that Nigeria’s economy is moving toward stability due to government reforms.
However, economic growth has been downgraded amid severe flooding in various states, particularly in Maiduguri.
The World Bank’s latest report highlights a 13-month rise in inflation, influenced by the removal of fuel subsidies, leading to increased costs for transportation and production, alongside the naira’s depreciation.
The National Bureau of Statistics recorded a significant inflation increase from 22.41% in May to 27.33% in October 2023, with further surges into early 2024, peaking at 34.19% in June.