January 31, (THEWILL) – The International Monetary Fund (IMF) has revised upwards the growth projections for Nigeria in 2023 to 3.2 percent from 3.1 percent which was projected earlier in Q4 2022.
This was contained in the Fund’s latest World Economic Outlook update for January, released early Tuesday morning.
The IMF however retained Nigeria’s growth forecast for 2024 at 2.9 percent.
Giving reasons for the upward adjustment in Nigeria’s growth forecast, the IMF said it noted the efforts being made by the Nigerian authorities to address two key macroeconomic challenges – insecurity and oil theft.
Insecurity has bedeviled Nigeria in a dimension never known in history since 2015 leading to food inflation and high cost of transportation, while massive oil theft occurred in recent times.
This culminated in the Nigerian National Petroleum Company (NNPC) Limited making zero remittance to the Federation Allocation Accounts Committee (FAAC) in 2022, citing oil theft of over 400,000 barrels per day.
“The small upward revision for 2023 (0.1 percentage point) reflects Nigeria’s rising growth in 2023 due to measures to address insecurity issues in the oil sector,” the IMF said.
Comparing the scenario in Africa’s second largest economy, the IMF said, “In South Africa, by contrast, after a COVID-19 reopening rebound in 2022, projected growth more than halves in 2023, to 1.2 percent, reflecting weaker external demand, power shortages, and structural constraints.”
Announcing a higher global growth projection, the IMF revealed that forecast for 2023 is 0.2 percentage points higher than predicted in the October 2022 World Economic Outlook (WEO) but below the historical (2000–19) average of 3.8 percent.
“Global growth is projected to fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, then rise to 3.1 per cent in 2024.
“The forecast for 2023 is 0.2 percentage points higher than predicted in the October 2022 World Economic Outlook (WEO) but below the historical (2000–19) average of 3.8 percent.
“The rise in central bank rates to fight inflation and Russia’s war in Ukraine continue to weigh on economic activity.
“The rapid spread of COVID-19 in China dampened growth in 2022, but the recent reopening has paved the way for a faster-than-expected recovery.
“Global inflation is expected to fall from 8.8 percent in 2022 to 6.6 per cent in 2023 and 4.3 percent in 2024, still above pre-pandemic (2017–19) levels of about 3.5 per cent,” the report stated.
The IMF noted that adverse risks have moderated since the October 2022 WEO and On the upside, a stronger boost from pent-up demand in numerous economies or a faster fall in inflation is plausible.
“On the downside, severe health outcomes in China could hold back the recovery, Russia’s war in Ukraine could escalate, and tighter global financing costs could worsen debt distress.
“Financial markets could also suddenly re-price in response to adverse inflation news, while further geopolitical fragmentation could hamper economic progress,” it stated.
Earlier this month, the World Bank had further reviewed Nigeria’s projected growth to 2.9 per cent from 3.1 per cent last year.
The World Bank in its January Global Economic Prospects released in January 2023 had said Nigeria’s slower growth for 2023 and 2024 is a reflection of the downturn in its oil sector as well as the aftermath of rising insecurity and flooding.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
