The International Monetary Fund (IMF) has revised its forecast for Nigeria’s economic growth in 2024 downwards from 3.1 per cent to 3.0 per cent, a 0.1 per cent decline from its previous estimate. The revised forecast was published in the IMF’s latest World Economic Outlook report for 2024 and 2025.
The IMF’s quarterly World Economic Outlook report also stated that sub-Saharan Africa’s economy is expected to grow by 3.8 per cent in 2024 and 4.1 per cent in 2025, a downward revision from the previously forecasted 4.0 per cent growth in 2024.
On the global scale, the IMF announced that the global economy is projected to grow by 3.1 per cent in 2024, an increase from the 2.9 per cent forecast in October. For 2025, the IMF maintained its forecast of 3.2 per cent growth. The upward revision for 2024 is due to stronger-than-expected growth in the second half of 2023, with activity picking up in advanced economies. However, this is tempered by downside risks, including the war in Ukraine, high inflation, and ongoing monetary tightening.
“The clouds are beginning to part. The global economy begins the final descent toward a soft landing, with inflation declining steadily and growth holding up. But the pace of expansion remains slow, and turbulence may lie ahead,” it stated.
According to the IMF, there are several downside risks to global economic growth in 2024, including potential spikes in commodity prices due to geopolitical shocks and global supply disruptions.
The major financial agency of the United Nations noted that geopolitical risks, such as attacks by Houthis in the Red Sea or an escalation of conflicts in the Middle East, could have a significant impact on global commodity markets. In addition, the IMF noted that the risk of persistent inflation, which could require central banks to maintain higher interest rates for longer than anticipated.
The IMF expressed its concern about the potential fragmentation of global trade into competing blocs, which could harm economic growth and job creation around the world. It projected world trade growth of 3.3 per cent in 2024 and 3.6 per cent in 2025, which is below the historical average rate of 4.9 per cent.
In its report, the IMF emphasised that as inflation declines toward target levels in different regions, central banks must prioritise a smooth landing, meaning they should avoid both cutting rates too early and delaying the cut too much. This is a delicate balancing act, and the IMF emphasised that central banks must communicate their policy plans clearly and in a timely manner.