IMF downgrades Nigeria’s economic growth forecast from 3.1% to 3% in 2024

The International Monetary Fund (IMF) has reduced its forecast for Nigeria’s economic growth to 3 percent in 2024 — down from a 3.1 percent projected in October 2023.

This is contained in the Washington-based institution’s World Economic Outlook (WEO) update for January 2024.

The outlook, released on Tuesday, is titled, ‘Moderating Inflation and Steady Growth Open Path to Soft Landing’.

IMF also projected a 3.1 percent economic growth for Nigeria in 2025.

In the outlook, IMF also downgraded its forecast for sub-Saharan Africa from 4 percent to 3.8 percent for 2024.

“In sub-Saharan Africa, growth is projected to rise from an estimated 3.3 percent in 2023 to 3.8 percent in 2024 and 4.1 percent in 2025, as the negative effects of earlier weather shocks subside and supply issues gradually improve,” IMF said.

“The downward revision for 2024 of 0.2 percentage point from October 2023 mainly reflects a weaker projection for South Africa on account of increasing logistical constraints, including those in the transportation sector, on economic activity.”

Revealing further, the organisation increased global growth by 0.2 percent to 3.1 percent this year, before rising modestly to 3.2 percent in 2025.

IMF said: “Compared with that in the October 2023 WEO, the forecast for 2024 is about 0.2 percentage points higher, reflecting upgrades for China, the United States, and large emerging markets and developing economies.”

“Nevertheless, the projection for global growth in 2024 and 2025 is below the historical (2000–19) annual average of 3.8 percent, reflecting restrictive monetary policies and withdrawal of fiscal support, as well as low underlying productivity growth.

“Advanced economies are expected to see growth decline slightly in 2024 before rising in 2025, with a recovery in the euro area from low growth in 2023 and a moderation of growth in the  United States. 

“In emerging market and developing economies, growth is expected to remain at 4.1 percent in 2024 and to rise to 4.2 percent in 2025. 

“An upward revision of 0.1 percentage point for 2024 since October 2023 reflects upgrades for several regions.”

IMF also said emerging markets and developing economies are expected to experience stable growth through 2024 and 2025, with regional differences.

On inflation, the outlook said global headline inflation is expected to fall from an estimated 6.8 percent in 2023 (annual average) to 5.8 percent in 2024 and 4.4 percent in 2025.

The organisation said advanced economies are “expected to see faster disinflation, with inflation falling by 2.0 percentage points in 2024 to 2.6 percent, than are emerging market and developing economies, where inflation is projected to decline by just 0.3 percentage point to 8.1 percent”. 

IMF, however, said inflation declines toward target levels across regions, adding that the near-term priority for central banks is to deliver a smooth landing, neither lowering rates prematurely nor delaying such lowering too much.

“With inflation drivers and dynamics differing across economies, policy needs for ensuring price stability are increasingly differentiated,” IMF said.

“At the same time, in many cases, amid rising debt and limited budgetary room to manoeuvre, and with inflation declining and economies better able to absorb effects of fiscal tightening, a renewed focus on fiscal consolidation is needed.”

IMF said intensifying supply-enhancing reforms would facilitate both inflation and debt reduction and enable a durable rise in living standards.