IMF Downgrades Nigeria’s Economic Growth Projection Slightly to 3.1%

•Hails monetary tightening in Nigeria, others 

•Says cash transfers key to protecting Nigeria’s vulnerable population

Nume Ekeghe

The International Monetary Fund (IMF) has downgraded Nigeria’s 2024 economic growth forecast to 3.1 per cent, from the 3.3 per cent it had previously estimated.

However, IMF retained its 2025 growth forecast of three per cent.

Nigeria’s new growth prospects were stated in IMF’s latest World Economic Outlook (WEO) released yesterday, titled, “The Global Economy in a stick Spot.”

 IMF also praised Nigeria and other Sub-Saharan African countries for tightening their monetary policies. It projected a decline in inflation, suggesting that monetary policy easing may soon be on the horizon.

Additionally, IMF acknowledged Nigeria’s plans to resume cash transfers to vulnerable populations as a commendable effort to shield citizens from numerous economic shocks.

The report stated, “The forecast for growth in sub-Saharan Africa is revised downward, mainly as a result of a 0.2 percentage point downward revision to the growth outlook in Nigeria amid weaker-than-expected activity in the first quarter of this year.”

 Speaking at the virtual press briefing to unveil the report, Chief Economist and Director, Research Department, IMF, Pierre-Olivier Gourinchas, said, “The growth projections for 2024 are revised downwards a little bit to 3.7 per cent, that’s and negative 0.1 percentage point revision and unchanged for 2025 at 4.1 per cent.

“And the broad context here is that as we see inflation increasingly in the rear-view mirror and we expect to see inflation in the rear-view mirror, there is going to be an easing of global monetary conditions and financial conditions and that is going to benefit also the region.”

Gourinchas reiterated that monetary conditions were expected to ease and inflation would be brought under control. 

He stated, “The context is challenging for many countries in the region because of the funding squeeze that I mentioned already that is affecting a number of countries, especially in Sub-Saharan Africa.

“As we expect the monetary conditions to ease and inflation to be brought under control, then that gradually will also ease as well.

“So that will be a positive development. But clearly at the end of the day, what is very important for the region is to put in place the conditions for sustained growth. The continent has a tremendous number of assets.

 “It’s a growth opportunity. In particular, it has very favourable demographics. It has a young population that is going to be of working age, which can certainly increase the outlook in that region.

“One of the challenges is going to be to bring skills and education, and human capital to that population that is just willing and eager to engage in the global economy.”

Division Chief, Research Department, IMF, Jean-Marc Natal, stated that Nigeria’s resumption of cash transfers was a prudent move to safeguard the most vulnerable members of society.

Natal said, “Growth is improving slowly in the region. But the main issue is inflation for many of the countries in the region and it comes from a cycle of depreciation and inflation, and our recommendation in such cases for monetary policy to tighten and stabilise inflation to achieve price stability in the medium term, which will be a precondition for re-establishing the fundamental condition for growth in the country.”