…anchors projection on strong crude production, higher sectoral output
Nigeria’s leading think tank group, the Nigerian Economic Summit Group (NESG) has projected that the Nigerian economy will record a real GDP growth rate of 3.5 percent in 2024, in view of the ongoing reforms and anticipated enhanced productivity in labour-intensive sectors such as agriculture, construction, trade, and manufacturing, all acting as a nexus to reduce unemployment and poverty headcount in the country.
NESG made this disclosure yesterday at a hybrid event in Lagos for the launch of its 2024 economic outlook for Nigeria, attended by the people that matter in the country. The keynote speaker was Dr Olayemi Cardoso, Governor, Central Bank of Nigeria (CBN). Other speakers included Dr Christian Ebeke, Nigeria Country Representative, IMF; Dr Alex Sienaert, Nigeria Lead Economist, World Bank; Dr Muhammad Sagagi, former vice chairman, Presidential Economic Advisory Council, and Dr Osasuyi Dirisu, executive director, Policy Innovation Centre.
“I am truly honoured to deliver the keynote address of this event. It is crucial to emphasize that NESG has become one of the platforms for public-private dialogue in our country. I want to assure you that we are now at a turning point, that the bold reforms being undertaken in different segments of the economy, while initially challenging, are ultimately directed towards addressing these challenges in a sustainable manner. I am confident that we are already witnessing positive outcomes,” Dr Cardoso said yesterday.
The NESG, while sounding very optimistic about the Nigerian economy in 2024, added that its projection will be shaped by a myriad of internal and external factors in the current year.
“Global developments, encompassing the trajectory of global output, fluctuations within the global crude oil market, international trade dynamics, and other pertinent factors, will undeniably influence this outlook.
“Concurrently, the domestic economic landscape will be influenced by fiscal spending. At the same time, the stabilisation efforts of the government will play a pivotal role in shaping the performance trends of key macroeconomic indicators in the upcoming year,” the NESG said in its 2024 outlook.
The NESG projects that crude oil prices will be at $90/barrel on the average throughout 2024, notably higher than the $77.96/barrel in Nigeria’s 2024 appropriation act.
“This projection anticipates a scenario where conflicts in the Middle East disrupt global oil supply and the lingering impact of the Russia-Ukraine crisis maintains a subdued momentum in the energy market,” the NESG said, adding that should this hold, Nigeria is poised to generate surplus demand for crude oil, sustaining elevated prices throughout the year.
The conflict in the Middle East involving Israel and Hamas has already drawn in external parties such as the Yemeni Houthi who have vowed no ships would sail to Israel unless the war in Gaza stops, and the United States and United Kingdom, among others.
On the other hand, the Russia-Ukraine conflict continues, with both parties striking the heart of economic activities in each other’s territory.
The NESG added that the reduction in crude oil theft has improved crude oil production, forecast to be in the region of 1.75 million barrels per day in the current year, higher than the 1.3 million barrels per day in the previous year, ultimately contributing to higher revenue generation for the government.
“This scenario sets the stage for the government to accrue higher revenue in 2024, fostering enhanced budget implementation performance, improved fiscal deficit management, and a possible augmentation of funds allocated towards capital expenditure,” the NESG said.
In all, inflation is expected to be moderate, hovering around 21.5 percent in 2024 on the average, as against 24.5 percent in 2023, noting that the slowdown in inflation will be as a result of lower deficit monetisation, relative exchange rate stability, among others.
“The convergence of these effects and a stable policy environment will bolster foreign capital inflows in 2024. The nation is poised to maintain a trade surplus, accumulate more foreign reserves, and witness a subsiding exchange rate pressure throughout the year.
“Reduced political risks and improved returns on investments will likely entice the return of confident foreign investors and activate previously dormant funds held by local investors,” the NESG said.
On the flip side, food inflation will remain the main driver of inflation in the current year, due to higher cost of credit, insecurity, and internal displacement.
