The International Monetary Fund (IMF) has revised Nigeria’s 2024 economic growth forecast to 3.1%, down from its earlier projection of 3.3%. This adjustment, outlined in the IMF’s latest World Economic Outlook (WEO) report, reflects weaker-than-expected economic performance during the first quarter of 2024.
The report also downgraded Sub-Saharan Africa’s overall growth forecast from 3.8% to 3.7%. The IMF emphasized the importance of tighter monetary policies in countries like Nigeria, where inflation remains a persistent challenge.
IMF officials had initially projected Nigeria’s economy to grow by 3.3% in 2024 during an April outlook but revised the forecast downward in July. Pierre-Olivier Gourinchas, the IMF’s economic counsellor and director of research, presented the report at a press conference during the IMF/World Bank annual meetings in Washington, D.C.
Gourinchas stressed the importance of balancing monetary and fiscal policies to manage inflation and rising debt. He noted the difficulty governments face in reducing inflation while also providing essential support to vulnerable populations. “Fiscal consolidation is complicated when governments must respond to crises like floods or extend support to the poor,” he explained.
Debt sustainability remains a significant concern in the region. Gourinchas acknowledged some progress in debt control but cautioned that the debt burden remains heavy. “With the right policy mix, however, there is potential for further economic stability,” he added.
The IMF’s recommendations focus on monetary tightening to address inflation while urging fiscal discipline. Gourinchas highlighted the need for continued reform: “Progress has been made, but the road ahead is challenging. Commitment to these reforms is crucial.”
For many African nations struggling with inflation and debt, the IMF’s guidance could shape policy decisions in the coming months. “We recommend a tight monetary policy stance in countries with high inflation, complemented by fiscal consolidation where possible,” Gourinchas said.
Economic Headwinds and Regional Concerns
The WEO report predicts that Sub-Saharan Africa’s growth will hold steady at 3.6% in 2023, with a slight increase to 4.2% in 2024. However, the region remains vulnerable to challenges, including conflict, extreme weather events, and inflation.
“Growth remains subdued and uneven,” Gourinchas observed. “Weather shocks and conflict continue to disrupt economies, and while inflation is stabilizing in some areas, many countries are still grappling with double-digit inflation.”
Nigeria, in particular, has faced significant disruptions. Severe flooding earlier in 2024 killed 185 people and displaced over 208,000 across 28 states, according to the National Emergency Management Agency. The floods, attributed to poor infrastructure and dam management, also destroyed homes and farmlands, exacerbating food insecurity in the northern region.
Additionally, unrest in the oil-producing Niger Delta region has affected oil production—Nigeria’s primary revenue source—further straining the economy.
Global Economic Outlook and Shifts
The IMF report noted that global growth remains stable but modest, with underlying shifts since the April 2024 projections. Upgrades to the U.S. growth outlook have been offset by downgrades in other advanced economies, particularly in Europe.
In emerging markets, disruptions in commodity production, civil unrest, and weather-related shocks have dampened forecasts for the Middle East, Central Asia, and Sub-Saharan Africa. However, emerging Asia has seen growth bolstered by strong demand for semiconductors and electronics, driven by investments in artificial intelligence and public spending in China and India.
The IMF projects global growth to average 3.1% over the next five years, which it describes as “mediocre” compared to pre-pandemic levels.
Navigating Inflation and Policy Reforms
While global disinflation continues, the IMF noted that services price inflation remains elevated in many regions, underscoring the need for nuanced monetary policies. As cyclical imbalances in the global economy diminish, the IMF advised that near-term policy priorities be carefully managed to ensure economic stability.
The report also emphasized the importance of structural reforms to boost medium-term growth prospects while maintaining support for vulnerable populations. “Chapter 3 discusses how to enhance the social acceptability of these reforms—an essential element for successful implementation,” the report concluded.
