IMF Cuts Nigeria’s Growth Forecast Amid Low Oil Production and Severe Flooding

The International Monetary Fund (IMF) has downgraded Nigeria’s growth forecast due to challenges like low oil production, severe flooding, and rising inflation. In its latest World Economic Outlook (WEO), the IMF reduced Nigeria’s 2024 growth projection from 3.3% to 2.9%, attributing the revision to economic setbacks caused by inflation, environmental disasters, and oil production issues.

The global growth forecast for 2025 remains steady at 3.2%, with no change from previous projections. For Nigeria, however, the IMF anticipates a slight improvement in 2025, with a growth forecast of 3.1%, a 0.2% increase from its July estimate.

Nigeria’s inflation rate is expected to remain high, with the IMF predicting it will stabilize at 25% in 2025 and gradually reduce to 14% by 2029. The country’s economy showed resilience earlier this year, growing by 2.98% and 3.19% in the first two quarters of 2024, despite a sharp rise in inflation and a steep depreciation of the naira. Inflation, which surged throughout 2023, began to slow in July 2024, but rose again after a fuel price hike by the Nigerian National Petroleum Corporation Limited (NNPCL) in September.

The IMF attributed its downward revision to two main factors: disruptions in agriculture due to severe flooding and ongoing security and maintenance challenges affecting oil production. Jean-Marc Natal, a division chief at the IMF’s Research Department, pointed out that while inflation has stabilized in some countries, many in the region, including Nigeria, still face double-digit inflation and high debt levels.

Despite the bleak growth forecast, the IMF noted that Nigeria is on a path to stability thanks to recent economic reforms. However, severe flooding, particularly in Maiduguri, continues to pose challenges. Additionally, the World Bank highlighted inflationary pressures caused by factors such as the removal of fuel subsidies, which increased transportation and production costs, and the weakening of the naira against major currencies.

Inflation in Nigeria has surged in recent months, with the National Bureau of Statistics reporting a rise from 22.41% in May 2023 to 34.19% in June 2024 before easing slightly to 32.70% in September. The country also continues to struggle with low oil production due to pipeline vandalism and crude oil theft, further hampering economic recovery.