IMF lowers Nigeria’s 2024 economic outlook to 3.1% amid weak Q1 performance

The International Monetary Fund (IMF) has revised its previous prediction for Nigeria’s economic growth in 2024, lowering the forecast from an initial estimate of 3.3 percent to 3.1 percent. This downward adjustment, according to the IMF, was driven by the weaker economic growth recorded in the first quarter of the year, signaling a potential slowdown in the country’s economic momentum.

In its most recent World Economic Outlook released in July 2024, the IMF lowered its growth forecast for Nigeria by  0.2 percent from its previous projection, based on the country’s slower than anticipated 2.98 percent first quarter 2024 GDP growth, as reported by the National Bureau of Statistics (NBS).

Despite the IMF’s revision of its 2024 growth projection for Nigeria, the organisation maintained its earlier forecast of 3.0 percent growth for the country in 2025. This downward review in the IMF’s estimate for Nigeria’s economic growth in 2024 had a ripple effect on its wider projection for Sub-Saharan Africa, leading to a revised forecast of 3.7 percent growth for the region in 2024, down from the previously predicted 3.8 percent in April’s World Economic Outlook (WEO).

While the IMF revised its Sub-Saharan Africa economic growth projection for 2024 downwards, it adjusted its forecast upwards for 2025 to 4.1 percent, citing improved growth prospects for the region despite the downward revision in Nigeria’s outlook.

The IMF explained that the 0.2 percentage point downward revision in Nigeria’s growth outlook was a significant factor in its downward revision for the entire sub-Saharan African region.

“The forecast for growth in sub-Saharan Africa is revised downward, mainly as a result of a 0.2 percentage point downward revision to the growth outlook in Nigeria amid weaker than expected activity in the first quarter of this year,” the IMF stated.

Meanwhile, the IMF maintained its global economic growth projections of 3.2 percent for 2024 and 3.3 percent for 2025, as presented in the April 2024 WEO. According to the IMF’s latest assessment, the global economy finds itself in a sticky spot, with growth remaining relatively stable compared to its previous forecast despite persisting risks and uncertainties in various regions worldwide.

While the IMF retained its previous growth projections, it noted that the diverse pace of economic activity observed at the beginning of the year has led to a partial convergence in economic performance across countries. As cyclical factors, such as the pandemic-driven economic shocks, gradually wane, and economic activity becomes more in line with its potential output, the disparities in growth rates between countries have started to diminish.

According to the IMF’s analysis, the persistent inflationary pressures in the services sector, which constitutes a significant portion of most economies, is delaying progress towards lower inflation levels, thus posing a challenge to monetary policymakers’ efforts to return interest rates to their pre-pandemic normality.

This, the IMF notes, raises concerns about the possibility of a prolonged period of elevated inflation, with higher interest rates than previously anticipated. The IMF highlighted that such a scenario would be particularly problematic in the current global environment, where the landscape is already marked by escalating trade tensions and rising policy uncertainty.

“To manage these risks and preserve growth, the policy mix should be sequenced carefully to achieve price stability and replenish diminished buffers,” it advised.