The International Monetary Fund, IMF, has raised alarm over the negative effects of high inflation on consumption of goods and services in the country, even as it downgraded its economic growth forecast for Nigeria to 2.9 percent from 3.3 percent.
Nonetheless, the fund also predicted that recent Federal Government reforms, such as the elimination of multiple exchange rates and the removal of fuel subsidy, will result in a stronger and more inclusive economic growth in the nation, while also advocating for additional interest rate hikes to control inflation.
The latest forecasts were contained in the IMF’s World Economic Outlook report, October 2023 released on the sidelines of the ongoing World Bank/IMF Annual Meetings in Marrakesh, Morocco.
The new forecast for Nigeria’s economic growth is 0.3 percentage point lower than the 3.2 per cent projected by the IMF in July. It is also 0.85 percentage points lower than the 3.75 per cent economic growth rate projected by the Federal Government in the 2023 budget.
Similarly, the IMF has reduced its economic growth forecast for sub-Saharan Africa to 3.3 per cent in 2023, down from the 3.3 per cent forecast made in July. But the IMF retained its growth forecast for the global economy at 3.0 percent.
“The global economy is limping along, not sprinting. According to our latest projections, world economic growth will slow from 3.5 percent in 2022 to 3 percent this year and 2.9 percent next year, a 0.1 percentage point downgrade for 2024 from July. This remains well below the historical average”, the IMF said.
Head, World Economic Studies Division, IMF, Daniel Leigh, said, “For Nigeria in particular we have a growth forecast that goes from 3.3 per cent this year to 2.9 percent next year before going up to 3.1 in 2024 there is a downward revision for this year, partly this is because of the demonetization, the high inflation, the shocks to agriculture and hydrocarbon output. That is coming on top of all those external headwinds.
“We also add that President Tinubu has moved quickly with important reforms including ending the fuel subsidies and unifying the official exchange rates. We welcome these initial bold reforms because we see them as paving the way towards stronger and inclusive growth.”
