The International Monetary Fund (IMF) has upheld its growth projection of 3.3 percent for Nigeria’s economy in 2024, signaling a slight improvement from the previous year’s growth of 2.9 percent. Despite the optimistic outlook driven by a revival in the services and trade sectors, Nigeria faces persistent challenges. Hence, soaring food prices and inflation reached alarming levels in March.
Challenges facing Nigeria
Food price inflation soared to 38 percent in March, raising concerns about food security in Africa’s most populous nation. The IMF acknowledges the daunting task of addressing food insecurity amidst the economic challenges facing Nigeria. Over the past decade, Nigeria has grappled with limited reforms, security threats, weak growth, and now, high inflation. These factors have exacerbated poverty and food insecurity, underscoring the need for comprehensive reforms and strategies to stimulate sustainable growth.
Economic outlook
Despite the challenges, the IMF projects a growth rate of 3.3 percent for Nigeria in 2024. Thus, it expects improvements in oil production, agriculture and enhanced security measures. The financial sector has remained stable, but risks persist, requiring determined policy implementation.
In addition, inflation surged to 32 percent year-on-year in February 2024 due to food price inflation and loose financial conditions. The IMF anticipates a gradual decline in Nigeria’s inflation to 24 percent by the end of 2024, contingent upon continued monetary tightening.
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Nigeria’s fiscal position
Furthermore, Nigeria’s fiscal position strengthened in 2023, supported by enhanced revenue administration and expenditure rationalization. The government also implemented measures to mitigate the impact of high inflation, including wage increases and strengthening the social cash transfer system.
The IMF states that Nigeria’s near-term risks are tilted to the downside, including potential shocks to agriculture, global food prices and oil production. These factors could exacerbate inflationary pressures, weaken the fiscal and external position, and hamper economic growth. Therefore, the IMF underscores the importance of determined and well-sequenced implementation of policy intentions to unlock faster, inclusive, and resilient growth. Addressing food insecurity, bolstering agriculture, and maintaining stability in the financial and external sectors are key priorities for Nigeria’s economic policymakers.
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