IMF Slashes Nigeria’s Economic Growth Forecast To 2.9% In 2023

Daud Olatunji

In a sobering update, the International Monetary Fund (IMF) has downgraded Nigeria’s economic growth projection, pointing to several challenges facing the nation.

According to the IMF’s latest report, titled “World Economic Outlook: Navigating Global Divergences,” Nigeria’s economic growth is set to decline from 3.3 percent in 2022 to just 2.9 percent in 2023.

This revision reflects weaker oil and gas production than expected, partly due to necessary maintenance work.

High inflation has been a major concern, with the IMF forecasting that the country’s economy will grow at 3.1 percent in 2024, although it will still grapple with the negative effects of high inflation on consumption.

Despite global headline inflation gradually decreasing, Nigeria continues to face challenges.

The report notes that nearly three-quarters of economies are expected to experience lower headline inflation in 2023, but this decline is particularly pronounced in advanced economies.

Low-income developing countries, including Nigeria, are still struggling with high inflation, and the IMF does not expect inflation to fall until 2024 in these regions.

President Bola Tinubu’s announcement of the removal of petrol subsidies and the Central Bank of Nigeria’s move to unify the forex exchange market have caused hardships for many Nigerians, leading to an increase in the prices of goods and services.

These policy changes have also placed additional pressure on the local currency and manufacturers.

Inflation remains stubbornly high in Africa’s largest economy, prompting the Central Bank of Nigeria to raise interest rates to their highest levels in nearly two decades in an effort to moderate inflation.

The CBN has indicated that the option to continue moderately hiking the policy rate remains on the table.

Nigeria has faced numerous challenges in recent years, including revenue problems, pipeline vandalism, and crude oil theft in its oil-producing region, all of which have contributed to the economic challenges the country faces.

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