IMF Raises Nigeria’s Growth Forecast To 3.3%

The International Monetary Fund (IMF) on Tuesday, raised Nigeria’s Gross Domestic Product (GDP) from 2.9 per cent in 2023 to 3.3 per cent in 2024, saying that there is improved recovery of the country’s oil sector, better security situation, and improved agriculture.

The Fund disclosed this at a press conference on the world economic outlook addressed by Pierre-Olivier Gourinchas, economic counsellor and director, research department, IMF, Petya Koeva-Brooks, deputy director, research department, IMF, and Daniel Leigh, division chief, research department, IMF, on the sidelines of the ongoing spring meetings in Washington D.C.

The Fund also said the tightening measures deployed by the Central Bank of Nigeria among other regimes will likely tame inflationary pressures to 26 per cent within the year; 23 per cent next year and then to 18 per cent in 2026.

The IMF said Nigeria’s inflation will decline to 23 per cent next year and then 18 per cent in 2026, adding that the growth forecast is in the right direction.
Leigh said, “Growth in Nigeria is steady but actually rising this year from 2.9 per cent last year to 3.3 per cent this year. We have seen an expansion from the recovering oil sector with a better security situation and also improved agriculture benefiting from the better weather conditions and the introduction of dry season farming.

“So there is a broad-based increase also in the financial sector and the IT sector. Inflation has increased, part of this reflects the reforms, the exchange rate and it has passed from imports to other goods. This explains also why we revised our inflation projection for this year to 26 per cent.

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“But with the tight monetary policies and the interest rate policy increase and significant interest rate in February and March, we see inflation declining to 23 per cent next year and then 18 per cent in 2026. So, it is in the right direction,” he said.

Leigh, briefing on the Fund’s latest World Economic Outlook (WEO) during the ongoing Spring meetings jointly organised by the Fund and the World Bank.
He said the IMF is impressed by both the monetary and fiscal current policy directions, and on that basis

Nigeria’s growth is projected to rise from 2.9 per cent last year to 3.3 per cent in 2024.
The CBN, in March went bullish again, and jerked up the Monetary Policy Rate (MPR) 200 basis points to 24.75 per cent, indicating a 600 basis point raise within just a month.
The committee also adjusted the asymmetric corridor around the MPR to +100/-300 basis points, all of which reflect the CBN’s strong commitment to tackling inflation and exchange rate fluctuations.

While it retained the Cash Reserve Ratio of Deposit Money Banks at 45 per cent, it adjusted the Cash Reserve Ratio of Merchant Banks from 10 per cent to 14 per cent and left the Liquidity Ratio unchanged at 30.0 per cent.

But even with those rate adjustments, headline inflation went up to 33.20 per cent in March compared to 31.70 per cent in February 2024, according to figures released by the National Bureau of Statistics on Monday.

Addressing those concerns raised at the press briefing, Leigh acknowledged rising inflation but called it a reflection of the pass through effects of ongoing economic reforms as well as exchange rate market on inputs and consumer goods.

“This explains also why we revised up our inflation projection for this year to 26 per cent. But with the tight monetary policies and that interest rate increase, significant interest rate increases during February and March.

“We think we see inflation declining to 23 per cent next year and then 18 per cent in 2026. So in the right direction, definitely,” he noted.

On growth which the IMF sees will move up to 3.3 percent in 2024 but decelerate to 3 percent in 2025, Leigh said “We’ve seen an expansion from the recovery in the oil sector with a better security situation and also improved agriculture.

According to him, Nigeria’s economy is projected to benefit from the better weather conditions and the introduction of dry season farming.

“So there’s a broad-based increase also in the financial sector, in the IT sector, among others.