IMF Projects Nigeria, Global Economic Growth Amid Challenges

The International Monetary Fund (IMF) has forecast global growth to remain steady at 3.2% for both 2024 and 2025, as inflation declines. This was detailed in the IMF's World Economic Outlook (WEO) Update, released during the IMF/World Bank Meetings in Washington, D.C.

While the overall global projection aligns with previous forecasts, significant revisions have occurred beneath the surface. Low-income and developing economies face downward adjustments due to disruptions in commodity production and shipping, exacerbated by conflicts, civil unrest, and extreme weather. Conversely, emerging Asia is seeing growth improvements driven by strong demand for semiconductors and investments in artificial intelligence.

Advanced economies, particularly the U.S., are expected to experience robust growth of 2.8% in 2024, while emerging markets and developing economies are projected to maintain stable growth at around 4.2%. Global inflation is expected to decline from a peak of 9.4% in 2022 to 3.5% by the end of 2025, which may facilitate monetary easing by central banks.

The IMF outlines a “policy triple pivot” for macroeconomic flexibility:

Monetary Policy: Advanced economies are beginning to cut policy rates to support activity.

Fiscal Policy: Countries need to stabilize debt dynamics and rebuild fiscal buffers.

Growth-Enhancing Reforms: Structural reforms are necessary, requiring trust between governments and citizens.

For Nigeria, the IMF projects economic growth to slow to 2.9% in 2024, unchanged from 2023, marking a reduction from previous estimates. This slowdown is attributed to weaker-than-expected activity, particularly in agriculture and oil production due to flooding and security issues.

However, growth is expected to rise to 3.2% in 2025. The IMF also forecasts a decrease in Nigeria's inflation from an average of 32.55% in 2024 to 25% by 2025. The IMF urges Nigeria to adopt tighter monetary policies to stabilize its economy and emphasizes the need for balanced fiscal strategies to address inflation and debt challenges.

As Nigeria navigates rising inflation and currency depreciation, its growth rates for the first and second quarters of the year were recorded at 2.98% and 3.19%, respectively. Sustainable growth will depend on careful policy adjustments and structural reforms.