The US-based International Monetary Fund (IMF) has maintained its earlier forecast of 3.2 percent economic growth for Nigeria in 2023, despite the policy reforms implemented by President Bola Tinubu, including the removal of subsidies and unification of the exchange rate.
The IMF, headquartered in Washington, released an update to its World Economic Outlook, which had been published in April. While the institution raised the global economic growth forecast for 2023 by 0.2 percent points to 3.5 percent, Nigeria’s growth projection remained unchanged at 3.2 percent, as predicted in April, despite the bold reforms introduced by Tinubu’s administration.
The IMF attributed the gradual decline in Nigeria’s growth in 2023 and 2024 to security issues in the oil sector. Despite Tinubu’s efforts to boost sluggish growth in Africa’s largest economy, the IMF’s projection remained steady.
Apart from Nigeria, the IMF also provided insights into other countries’ economic outlooks. For instance, it predicted a decline in South Africa’s growth to 0.3 percent in 2023 due to power shortages. However, the forecast was revised upward by 0.2 percentage point since the April 2023 WEO due to resilience in services activity in the first quarter.
The IMF emphasized the importance for countries to achieve sustained disinflation while ensuring financial stability. It advised central banks to focus on restoring price stability and strengthening financial supervision and risk monitoring. Countries were also urged to provide liquidity promptly while avoiding moral hazard and building fiscal buffers to support the most vulnerable.
The IMF further stated that improvements in the supply side of the economy would facilitate fiscal consolidation and a smoother decline of inflation towards target levels. For advanced economies, a significant growth slowdown was projected for 2023, while emerging markets and developing economies were expected to experience broadly stable growth.
Pierre-Olivier Gourinchas, the IMF’s chief economist, highlighted that inflation remained a major obstacle to global growth, with potential risks arising from events like Russia’s conflict in Ukraine or extreme weather-related incidents.
