What is the 2023 economic outlook for Nigeria? In this post, Emmanuel Otori presents a holistic view of the economic projections for Nigeria in the New Year.
In conjunction with the IMF/World Bank annual meetings, forecasts were released at the July World Economic Outlook in July 2022. According to its projections, inflation in Nigeria will fall to 17%. However, there will be an increase in its Gross Domestic Product GDP to 3.4% in 2022 and 3.2% in 2023.
There was a reprojection in the October World Economic Outlook. According to the new projections, Nigeria’s GDP is projected to drop to 3.2% in 2023. This was with a difference of 0.2% from the July 2022 projection. The IMF estimates that by 2023, Nigeria’s inflation will have decreased to 17% from a projected 19%. Continue reading to find out more about the 2023 economic outlook for Nigeria.
Economic Outlook for Nigeria: Facts and Figures
According to the African Development Bank Group (AFDB), growth will slow, averaging 3.2% from 2022 to 2023. This is because of the continued low oil production and rising insecurity. The conflict between Russia and Ukraine, rising food, gas, and diesel costs, and continuous supply disruptions are all likely to play a part in keeping inflation high in 2022 at 16.9% and above pre-pandemic levels in 2023.
Oil exports will increase slightly and capital inflows will rebound. The expectation is that there will be a positive oil price shock on exports. This may be substantially outweighed by a poor output effect resulting from lower oil production, a ripple effect of inadequate infrastructure, and increased insecurity.
The anticipated 0.1% of GDP marginal current account surplus in 2022 could turn into a 0.2% deficit in 2023. With greater revenue collection, the budget deficit will typically drop to 4.5% of GDP. Furthermore, the prediction is that by 2024, the government debt is will reach 40% of GDP due to new borrowing.
From the IMF’s Research Department, Daniel Leigh, the Divisional Chief indicated that the recent increase in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN) as well as the global fall in the price of crude oil and food are the foundations for the reduced inflation rate forecasts for Nigeria. However, the IMF’s Pierre-Olivier Gourinchas, Director of Research, guided the CBN and its international counterparts on the selection of monetary policy instruments necessary to reduce inflation.
The IMF’s lower growth rate forecast for the global economy in 2023 was consistent with predictions for Nigeria’s GDP growth. Projections on the global economic growth for 2022 were retained at 3.2% whereas projected to decrease to 2.7% in 2023. In a statement describing why it anticipates slower global growth, the International Monetary Fund (IMF) explained:
“The world economy continues to face steep challenges, shaped by the Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.”
Curbing Economic Crisis
According to Pierre-Olivier Gourinchas, fiscal policy should not conflict with the efforts of the monetary authorities because otherwise, it will only prolong the existing inflation leading to a severe financial crisis. Fiscal policy should also focus on the most vulnerable groups for a short-term period. In addition, fiscal policy can aid economies in adjusting to more unpredictable situations by making investments in human capital, digitalization, and green energy. Although with this in place, economies can withstand unexpected future crises, he expressed sadness that policies do not follow these concepts.
Emmanuel Otori has over 10 years of experience working with 100 start-ups and SMEs across Nigeria. He has worked on the Growth and Employment (GEM) Project of the World Bank, GiZ, and Consulted for businesses at the Abuja Enterprise Agency, Novustack, Splitspot, and NITDA. He is the Chief Executive Officer at Abuja Data School.
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