October 23, 2024/CSL Research
The International Monetary Fund (IMF) has revised its economic growth forecast for Nigeria, indicating a slowdown in 2024. In its latest World Economic Outlook report, released on Tuesday, the IMF now projects Nigeria’s economy to grow by 2.9% in 2024. In its July forecast, the International Monetary Fund (IMF) projected Nigeria’s economic growth at 3.1% for 2024. This July projection was part of a broader global economic outlook update, factoring in some optimism for a moderate recovery in emerging markets. Earlier in April, the IMF had projected Nigeria’s 2024 growth at 3.3%. The IMF’s revision reflects its cautious outlook on challenges facing emerging markets, including weaker-than-expected economic activity in Nigeria during the first half of the year. However, the IMF expects growth to pick up in 2025, with a projection of 3.2%, which is 0.2% higher than its earlier forecasts in July and April.
The Gross Domestic Product (GDP) report published by the National Bureau of Statistics (NBS) showed that Nigeria’s GDP grew by 3.19% y/y in real terms in Q2 2024. This growth rate surpasses the 2.51% recorded in the second quarter of 2023 and the 2.98% reported in Q1 2024. The non-oil sector continued to be the primary driver of the economy, contributing approximately 94.30% to total GDP, while the oil sector contributed 5.70%. However, growth in the non-oil sector remained relatively unchanged at 2.80% in Q2 2024, similar to Q1 2024. Conversely, the oil sector showed significant improvement, with growth rising to 10.15% y/y in Q2 2024, compared to 5.70% y/y in Q1 2024.
Nigeria has been experiencing high inflation, driven by factors like food and energy costs, which impacts consumer spending and overall economic growth. The devaluation of the Naira has added to inflationary pressures and increased the cost of servicing foreign debt, leading to economic constraints. Nigeria continues to grapple with high levels of public debt, rising borrowing costs, and constrained government revenues, all of which limit the government’s ability to stimulate growth through spending. Broader global factors, such as a slowdown in global trade and monetary tightening in advanced economies, have affected emerging markets like Nigeria by reducing investment inflows and increasing borrowing costs. We revised our 2024 real GDP growth forecast downwards to 3.24% y/y from our initial forecast of 3.37% at the start of the year, mainly due to the delayed commencement of petrol refining by the Dangote refinery which we expected to boost the performance of the manufacturing sector in the second half of the year.
Click here to read full PDF copy of report
