UN bets on Nigeria economy expanding by 3.1% in 2024 

Onome Amuge

The World Economic Situation and Prospects (WESP) report, published by the United Nations, forecasts Nigeria’s gross domestic product (GDP) to grow by 3.1 percent in 2024 from an estimate of 3.0 percent in 2023, underpinned by the policy reforms of the President Bola Tinubu administration.

The report highlighted several factors that could affect Nigeria’s GDP growth in 2024. One of the key factors is the country’s growing public debt, which could constrain the government’s ability to invest in economic growth. The report also pointed to persistent inflation and a weak business environment as potential risks to the economy. On the positive side, the report noted that policy reforms in the hydrocarbon sector could help to improve the country’s growth prospects. 

The UN specifically noted that the Nigerian government’s efforts to increase in-country oil refining capacity are likely to have a positive impact on domestic fuel costs in 2024 and beyond. 

According to the UN’s flagship forecast report, while GDP growth in 2023 has been stronger than expected, there are underlying risks and vulnerabilities in the global economy that have been masked by this growth. The report goes on to state that these risks could lead to a downturn in economic activity in the near future.

The UN’s forecast of a slowdown in global growth from 2.7 percent in 2023 to 2.4 percent in 2024 is based on several key factors including persistently high-interest rates which are likely to dampen economic activity, as businesses and consumers face higher borrowing costs. This, it stated, could lead to slower investment and consumer spending, which would in turn affect global economic growth. In addition, the report notes that the escalation of conflicts and sluggish international trade pose further risks to the global economy.

The report highlights the potential for a prolonged period of higher borrowing costs and credit constraints to negatively impact economic growth, noting that this could present a significant challenge for countries that are heavily indebted, as they will face higher costs of servicing their debt. It however noted that the need for more investments to address climate change and meet the Sustainable Development Goals (SDGs) will become more difficult in a period of higher borrowing costs.

As per the report, inflation is expected to gradually decline from 5.7 percent in 2023 to 3.9 percent in 2024. This is due to the fact that some of the temporary factors that have driven up prices in recent years, such as supply chain disruptions and energy price shocks, are likely to dissipate over time. However, the report also noted that there is still some risk of further escalation of geopolitical conflict, which could lead to higher prices for key commodities such as oil and natural gas.

According to the report, in about 25 percent of all developing countries, inflation is expected to reach double digits by 2024.

The report highlights the impact of inflation on developing economies, noting that consumer prices have increased by 21.1 percent since January 2021. This, it stated, has had a significant negative impact on economic gains made in the aftermath of the COVID-19 pandemic. The report also noted that consumer spending, which has been a key driver of economic growth, is likely to be weakened by high interest rates and a softening labour market. These factors are likely to further exacerbate the negative impact of inflation on developing economies.

According to the report, the United States, the world’s largest economy, is expected to see a slowdown in GDP growth from 2.5 percent in 2023 to 1.4 percent in 2024. This slowdown is attributed to factors such as tighter monetary policy, weakening global demand, and slower household spending. China, the world’s second-largest economy, is also expected to see a slowdown in growth, with projections of 4.7 percent in 2024 compared to 5.3 percent in 2023.

The report also addressed the expected slowdowns in growth for Europe and Japan, with GDP growth rates of 1.2 percent in both regions. In Africa, the report forecasts GDP growth to increase moderately in 2024 to 3.5 percent.

The United Nations notes that urgent action is needed to address the diverse challenges facing the global economy. It therefore calls for coordinated policy action by governments, central banks, and international organisations to address these challenges and promote a more sustainable and inclusive economic recovery.