The International Monetary Fund (IMF) has revised Nigeria’s economic growth projection for 2024 downwards to 3.1%, citing a slowdown in economic activities in the first quarter of the year. This downgrade comes as businesses struggle to cope with the harsh economic environment, leading to factory shutdowns and distress in the manufacturing sector.
Nigeria’s GDP Growth Declines
Nigeria’s GDP growth rate declined to 2.98% in the first quarter of 2024, a significant drop from the 3.46% rate recorded in the fourth quarter of 2023. The removal of fuel subsidy and floating of the currency have made it challenging for manufacturers and traders to access foreign exchange, exacerbating the economic woes.
Inflation Hits All-Time High
Inflation in Nigeria has risen to 34.19% as of June 2024, with food inflation reaching an all-time high of 40.8%. The Manufacturers Association of Nigeria reported that 767 manufacturers shut down operations, while 335 became distressed in 2023, highlighting the severity of the economic situation.
Global Economic Forecast Remains Stable
Despite the downgrade for Nigeria, the IMF retained its global economic forecast, expecting growth to remain stable at 3.2% in 2024 and 3.3% in 2025. Global inflation is projected to decline to 5.9% in 2024 from 6.7% in 2023, providing some respite amidst the economic challenges.
This development highlights the need for urgent economic reforms to address the challenges facing Nigeria’s economy and restore growth and stability.