IMF revises down Nigeria’s economic growth forecast

The International Monetary Fund (IMF) has revised down its projection for Nigeria’s economic growth by 0.2 percentage points amid weaker-than-expected activity in the first quarter of this year.

Nigeria’s growth forecast was revised down by 0.2 from the previous projection in April.

This in turn led to a downward revision of economic growth in sub-Saharan Africa.

The IMF announced these developments in its World Economic Outlook (WEO) update released on Tuesday.

The report said: “Growth forecasts in sub-Saharan Africa were revised down, mainly as a result of a 0.2 percentage point downward revision to the growth outlook in Nigeria amid weaker-than-expected activity in the first quarter of the year.”

The Bretton Woods institutions warned that some short-term risks had become more pronounced than previously viewed.

It added: “Overall, risks to the outlook remain balanced, as in the April 2024 WEO, but some near-term risks have become more pronounced. These include upside risks to inflation stemming from the lack of progress in services disinflation and price pressures stemming from renewed trade or geopolitical tensions.”

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“Persistent inflation risks in the services sector are linked to wage and price setting, given that labor accounts for a large share of costs in the sector. Higher nominal wage growth, which in some cases reflects rising real wages, when accompanied by weak productivity, could make it difficult for firms to moderate price increases, especially when profit margins are already under pressure.

“This could lead to tighter wage and price inflation. Escalating trade tensions could increase near-term inflation risks by raising the cost of imported goods along the supply chain.

“Disruptions to the remaining deflationary path could undermine the restoration of price stability if short-term expectations rise as a result of disappointing inflation data.”

The IMF also maintained its global growth expectations for 2024.

The fund expects the world economy to grow 3.2 percent this year, unchanged from its April forecast.

“Global activity and world trade strengthened at the turn of the year, with trade driven by strong exports from Asia, particularly in the technology sector,” the report said.

For 2025, he estimates global growth of 3.3 percent.

The Washington-based lender also warned of the prospect of interest rates remaining high for longer amid rising trade tensions and increasing policy uncertainty.

By: Babajide Okeowo

IMF revises down Nigeria growth forecast first appeared on Latest Nigeria News | Headlines from Ripples Nigeria.