IMF Retains Nigeria’s 2023 Growth Projection at 3.2%

•Predicts 3% for 2024, forecasts Africa’s growth to decline to 3.5%

Ndubuisi Francis in Abuja and Nume Ekeghe in Lagos

The International Monetary Fund (IMF) has maintained its 2023 growth forecast for Nigeria at 3.2 per cent and three per cent for 2024, same figures it had projected for the country in April 2023.

The Washington-based institution made the projections in its latest World Economic Outlook (WEO) released yesterday.

In the report titled, ‘Near-Term Resilience Persistent Challenges’ it also predicted that Sub-Saharan Africa (SSA) would experience a decrease in growth, projected at 3.5 per cent in 2023, followed by a recovery to 4.1 per cent in 2024.

Similarly, it estimated that Nigeria’s growth prospects for 2023 and 2024 were anticipated to gradually decline, aligning with the projections made in April, primarily due to security concerns in the oil sector.

It states: “In sub-Saharan Africa, growth is projected to decline to 3.5 per cent in 2023 before picking up to 4.1 per cent in 2024. Growth in Nigeria in 2023 and 2024 is projected to gradually decline, in line with April projections, reflecting security issues in the oil sector.

“In South Africa, growth is expected to decline to 0.3 per cent in 2023, with the decline reflecting power shortages, although the forecast has been revised upward by 0.2 percentage point since the April 2023 WEO, on account of resilience in services activity in the first quarter.”

Responding to the impact of climate change in Sub-Saharan Africa as well as its growth prospects for SSA during a briefing yesterday, the Chief Economist and Director Research Department IMF, Pierre-Olivier Gourinchas said: “For the whole region, we have growth that is slowing a bit from 2022 to 2023 from 3.9 per cent to 3.5 per cent. That’s a very mild downward revision for 2023 about 0.1 percentage points.

“So, this is a gross number that is kind of on the low side. I was talking earlier about the fact that this is not an environment that has very strong robust growth. And this is certainly one of the regions where we see that it’s very different from emerging Asia, for instance.”

On climate change, he added: “It’s certainly the case that we’re seeing more extreme climate events. And some of these can have strong macroeconomic consequences we’ve seen and talked about the drought in Argentina, we can think about the floods in Pakistan, and we can think about the impact of temperatures rising on agricultural yields in general and agricultural production.

“So, this is certainly something that is very important, especially for countries that have very little fiscal space, very small buffers with which they can address some of that volatility in food prices. And that’s causing in many of these countries situations of food insecurity that were particularly acute last year.

“They are a little bit less acute now because food prices have been coming down, but that remains an important risk going forward. And climate change is certainly something that is aggravating that phenomenon.”

 It also stated that global inflation was projected to decline from 8.7 per cent in 2022, to 6.8 per cent this year, indicating a 0.2 percentage point decline, and 5.2 per cent in 2024.

According to the IMF, the global economy was on track but not yet out of the woods, adding that economic growth showed near-term resilience amid persistent challenges.

The IMF said the global economy continues to gradually recover from the pandemic and Russia’s invasion of Ukraine, stressing that in the near term, the signs of progress are undeniable.

Global inflation was projected to decline from 8.7 per cent last year to 6.8 per cent this year, a 0.2 percentage point downward revision, and 5.2 per cent in 2024.

According to the IMF, the slowdown is concentrated in advanced economies, where growth would fall from 2.7 per cent in 2022 to 1.5 percent this year and remain subdued at 1.4 per cent next year.

The euro area, still reeling from last year’s sharp spike in gas prices caused by the war, is set to decelerate sharply.