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The International Monetary Fund (IMF) clarified yesterday that it downgraded Nigeria’s growth projection, citing reduced output from both the agricultural and oil sectors.
These critical industries, which form the backbone of the nation’s economy, have struggled due to various challenges, leading to a more cautious outlook for future growth.
IMF’s Chief Economist, Mr. Pierre-Olivier Gourinchas, made this disclosure at today’s World Economic Outlook press briefing, which took place as part of the ongoing IMF/World Bank Annual Meetings in Washington, DC, USA. His announcement came amidst widespread discussions on global economic shifts and their implications for emerging markets like Nigeria.
He attributed the low agricultural output to destructive floods that have swept through key farming areas, and blamed insecurity in Nigeria’s oil-rich regions for stalling production in the petroleum sector, compounding the country’s economic difficulties.
His words, “We reversed Nigeria’s growth by 2 per cent down because things are volatile.
“The reason for the reversal is precisely because of issues in agriculture due to flooding and there are issues about production of oil relative to security which pushed down oil production.”
The IMF’s latest projection now sees Nigeria’s economy growing at 2.9 percent, a decrease from the July forecast of 3.1 percent. The revision highlights the slowing pace of economic growth, largely driven by reduced productivity in both the agricultural and oil sectors.
Read also: Nigeria Still Borrowing Despite Soaring Debt Pressures – IMF
The IMF initially anticipated a 3.3 percent growth rate for Nigeria in 2024 during its April projections, but by July, it had revised the figure down to 3.1 percent, attributing the cut to persistent challenges in agriculture and oil production.
In July the fund cut the rate to 3.1 per cent, down from the 3.3% estimated in April.
The Chief IMF Economist declined to comment on the impact of the federal government’s decision to remove fuel subsidies, an action that has brought untold suffering to ordinary Nigerians.
Responding to a Nigerian journalist’s question on the impact of the policy on Nigerians, Mr Gounrinchas said the numbers were not immediately available to him and that as such he needed time to check the data.
His words, “I am afraid, I have to go back and check as I don’t have the numbers ready on the impact of the removal of the fuel subsidy specifically.”
In its report on the world outlook, the IMF said, “Global growth is expected to remain stable yet underwhelming. However, notable revisions have taken place beneath the surface since April 2024, with upgrades to the forecast for the United States offsetting downgrades to those for other advanced economies, in particular, the largest European countries.
Likewise, in emerging market and developing economies, disruptions to the production and shipping of commodities—especially oil—conflicts, civil unrest, and extreme weather events have led to downward revisions to the outlook for the Middle East and Central Asia and that for sub-Saharan Africa.”
The Fund said however, “These have been compensated for by upgrades to the forecast for emerging Asia, where surging demand for semiconductors and electronics, driven by significant investments in artificial intelligence, has bolstered growth, a trend supported by substantial public investment in China and India. Five years from now, global growth should reach 3.1 per cent—a mediocre performance com
“As global disinflation continues, services price inflation remains elevated in many regions, pointing to the importance of understanding sectoral dynamics and of calibrating monetary policy accordingly, as discussed in Chapter 2. With cyclical imbalances in the global economy waning, near-term policy priorities should be carefully calibrated to ensure a smooth landing. At the same time, structural reforms are necessary to lift medium-term growth prospects, while support for the most vulnerable should be maintained. Chapter 3 discusses strategies to enhance the social acceptability of these reforms—a crucial prerequisite for successful implementation.”
