IMF Adjusts Nigeria’s Economic Outlook: 2024 Growth Projection Down to 3%

In a recent update to its World Economic Outlook (WEO), the International Monetary Fund (IMF) has slightly revised its growth projection for Nigeria in 2024 to three percent, a marginal decrease from the earlier forecast of 3.1 percent. This adjustment, announced in the IMF’s January edition of the WEO, presents a cautious yet realistic picture of Nigeria’s economic trajectory in the coming year.

The revised projection by the IMF marks a deviation from Nigeria’s own 2024 budget, which anticipated a 3.76 percent growth. This discrepancy underscores the challenges and uncertainties facing the Nigerian economy, amidst a complex global financial landscape.

Furthermore, the IMF maintained its 2025 growth forecast for Nigeria at 3.1 percent, indicating a steady yet modest economic expansion in the medium term. This outlook is reflective of a broader trend across Sub-Saharan Africa, where the IMF predicts an overall growth increase from an estimated 3.3 percent in 2023 to 3.8 percent in 2024, and further to 4.1 percent in 2025.

The WEO report attributes this regional growth to the subsiding of earlier adverse weather impacts and gradual improvements in supply chain issues. However, it also notes a downward revision for 2024, primarily due to a weaker projection for South Africa, influenced by increasing logistical challenges and transportation sector constraints.

The IMF’s global growth forecast, on the other hand, has been adjusted slightly upwards, reflecting the unexpected resilience of the United States economy and fiscal support measures in China. For 2024, global growth is projected at 3.1 percent, a slight increase from the October 2023 forecast. This upward revision acknowledges the greater-than-expected economic robustness in the United States and several large emerging market and developing economies, along with China’s fiscal support.

Despite these positive adjustments, the IMF’s forecast for 2024–2025 remains below the historical average of 3.8 percent for the 2000–2019 period. Factors such as high central bank policy rates aimed at combating inflation, the withdrawal of fiscal support amid elevated debt levels, and low underlying productivity growth continue to exert downward pressure on global economic activity.

Particularly noteworthy in the IMF’s assessment is the brighter outlook for the U.S. economy, which demonstrated a 3.1 percent growth last year. Additionally, China’s economy is outpacing previous estimates and is projected to grow by 4.6 percent in the current year.

However, the IMF expressed concerns over President Joe Biden’s industrial policy, particularly the subsidies aimed at boosting America’s clean energy and semiconductor sectors. IMF Chief Economist Pierre-Olivier Gourinchas warned that such policies could lead to retaliatory trade restrictions, negatively impacting global output.

In terms of inflation, global headline inflation is expected to decrease from an estimated 6.8 percent in 2023 to 5.8 percent in 2024, and further to 4.4 percent in 2025. These projections remain unchanged for 2024 compared with the IMF’s October 2023 outlook but have been slightly revised downwards for 2025.

This nuanced and comprehensive analysis by the IMF provides vital insights into the expected economic trajectories of Nigeria, the Sub-Saharan African region, and the global economy at large. As Nigeria navigates through these projected economic waters, the information serves as a crucial guide for policymakers, investors, and stakeholders in shaping the country’s economic strategies and responses in the face of both regional and global challenges.