April 18, 2024/CSL Research

In its April 2024 World Economic Outlook, the International Monetary Fund (IMF) maintained its projections for Sub-Saharan Africa, anticipating a growth in Real Gross Domestic Product (GDP) of 3.80% y/y in 2024, compared to 3.40% in 2023. However, the IMF adjusted its forecast for Nigeria, expecting its real GDP growth to reach 3.30% y/y in 2024. This is a slight increase of 3 basis points from its previous forecast of 3% y/y. Nevertheless, Nigeria’s GDP growth is predicted to decelerate to 3% in 2025 from the earlier projection of 3.1% y/y.

The anticipated upturn in Nigeria’s Real GDP for 2024 is driven by several key factors. We predict the nation’s GDP will reach 3.77% y/y, a rise from the 2.74% y/y reported in 2023. This forecast is primarily based on the expected expansion in the oil sector, projected to grow at 6.9% y/y, a significant turnaround from the 2.22% contraction in 2023. The anticipated improvement in oil production, set to increase to 1.56 million barrels per day (mbpd) in 2024 from 1.46 mbpd in 2023, is a key driver of this growth. We also expect better performance from the non-oil sector, particularly the services sector, which is projected to remain relatively stable, improving in 2024 to 4.16% from 4.02% in 2023.

Agric output slumped to an all-time low in 2023 due to the naira redesign and idiosyncratic risks like insecurity, weak rainfall, and high input costs. In 2024, we expect the sector’s growth to improve, mainly aided by base effect and improved rainfall conditions. We forecast growth of 1.62% in 2024 from 0.82% in 2023. In 2024, we are optimistic about the manufacturing sector, mainly stemming from the commencement of the Dangote refinery. In addition, we see legroom for higher oil refining from the 60,000 barrels Port Harcourt Refinery and the 125,000 barrels Warri Refinery. That said, we are quite sceptical about the ability of these refineries to produce, given several previously failed resuscitation attempts.