During the International Monetary Fund/World Bank Spring Meetings in Washington D.C. on Tuesday, the IMF released its Global Economic Outlook, providing projections for Nigeria’s economy and indicating a notable change in inflation rates.
Daniel Leigh, the Division Chief of the IMF Research Department, emphasized the effects of Nigeria’s economic reforms, such as exchange rate adjustments. These reforms have resulted in a notable increase in the inflation rate, reaching 33.2 percent in March.
Recent data from the National Bureau of Statistics shows that Nigeria’s inflation rate surged to 33.2 percent. Additionally, the food inflation rate exceeded 40 percent in the first quarter of 2024.
According to Leigh, “We anticipate a decrease in inflation to 23 percent next year, followed by a further decline to 18 percent in 2026.” This forecast contrasts with the IMF’s earlier prediction of a new single-digit (15.5 percent) inflation rate for 2025, made last year.
He further elaborated on Nigeria’s economic growth, which is expected to rise from 2.9 percent last year to 3.3 percent this year, attributing this expansion to the recovery in the oil sector, improved security, and advancements in agriculture due to better weather conditions and the introduction of dry season farming.
The IMF official also noted a broad-based increase in Nigeria’s financial and IT sectors.
“Inflation has increased, reflecting the reforms, the exchange rate, and its pass-through into other goods from imports to other goods,” Leigh explained.
He added that the IMF revised its inflation projection for the current year to 26 percent but emphasized that tight monetary policies and significant interest rate increases during February and March are expected to curb inflation.
An official of the IMF Research Department, Pierre Olivier Gourinchas commented on the global economic landscape, mentioning that oil prices have risen partly due to geopolitical tensions, and services inflation remains high in many countries.
Despite Nigeria’s inflation target of six to nine percent being missed for over a decade,
Gourinchas stressed that bringing inflation back to target should be the priority.
He warned of the risks posed by geo-economic fragmentation to global growth prospects and the need for careful calibration of monetary policy.
“Trade linkages are changing, and while some economies could benefit from the reconfiguration of global supply chains, the overall impact may be a loss of efficiency, reducing global economic resilience”.
