IMF downgrades growth prospects for Nigeria to 2.9%

By Joy Baba-Yesufu

The International Monetary Fund (IMF) on Tuesday downgraded its economic growth forecast for Nigeria to 2.9 percent from the 3.2 percent earlier projected in April citing demonetisation effects, high inflationary pressures, among other shocks.
But the economy could moderate slightly to 3.1 percent in 2024 as anticipated positive impact of President Tinubu’s recent reforms set in.
This is contained in the Fund’s latest World Economic Outlook (WEO) launched on the second day of the IMF and World Bank’s 2023 Annual meetings holding in Marrakech, Morocco.
Daniel Leigh, Division Chief, Research Department, IMF who took a specific question on Sub-Saharan Africa and Nigeria said the downward revision for Africa’s largest economy is due to the demonetization effects, high inflationary pressures, as well as shocks in agriculture and hydrocarbons that are coming in.
He however hailed recent reforms by President Tinubu’s administration in terms of energy subsidy removal and unification of exchange rates, and sounded optimistic these particular moves could help move up growth in the coming year.
Meanwhile, baseline forecast is for global growth to slow from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024, well below the historical (2000–19) average of 3.8 percent.
Pierre-Oliver Gourinchas, Chief Economist and Director, Research Department, IMF who led the press briefing noted that advanced economies are expected to slow from 2.6 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy tightening starts to bite.
Emerging market and developing economies are projected to have a modest decline in growth from 4.1 percent in 2022 to 4.0 percent in both 2023 and 2024.
This comes as Global inflation is seen to decline steadily, from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024, due to tighter monetary policy aided by lower international commodity prices.
Core inflation is generally projected to decline more gradually, and inflation is not expected to return to target until 2025 in most cases, the IMF notes.