Economy

IMF: Nigeria’s 2024 Growth Outlook Revised Upward – Coronation Economic Note

Published

6 months ago

April 29, 2024

In its latest World Economic Outlook (WEO), the IMF revised its global growth forecast for 2024 upward to 3.2% y/y from 3.1% y/y projected in its January ’24 WEO.

Meanwhile, the growth outlook for 2025 was unchanged at 3.2% y/y. It is worth highlighting that global growth projections for 2024 and 2025 remain below the historical (2000-2019) average of 3.8%.

Persistence inflationary pressure, turbulence in China’s property sector, ongoing geopolitical tensions, and financial stress continue to pose downside risk to global growth projection.

There was an upward growth revision for United States to 2.7% y/y from 2.1% y/y. The upward revision can be partly attributed to a stronger than expected growth in the US economy in Q4 ‘23 bolstered by healthier consumption patterns; stronger momentum is expected in 2024.

Growth in China remains steady at 4.6% y/y. This is consistent with the projection recorded in its January ’24 WEO, as post pandemic boost to consumption and fiscal stimulus eases off amid headwinds in the property sector. We expect a loosening or a hold stance in the near-term as China continues to seek ways to bolster its economy.

On the flip side, GDP growth was revised downward (marginally) for the Eurozone to 0.8% y/y from 0.9% y/y (in its January ’23 WEO) for 2024. The growth projection for the United Kingdom was also revised downwards to 0.5% y/y from 0.6% y/y.

Russia’s growth forecast was revised upward to 3.2% y/y from 2.6% y/y (in its January ’24 WEO) for 2024. This revision was largely due to high investment and robust private consumption supported by wage growth.

The projection for average global inflation was revised upward to 5.9% y/y for 2024 from 5.8% y/y (in its January ’24 WEO), with an expectation of a decline to 4.5% y/y in 2025.

This is reflective of the cooling effects of monetary policy tightening across advanced and emerging economies.

Based on IMF projections, we anticipate a swifter decline in headline inflation rates averaging near 2% in 2025 among advanced economies before the avg. inflation figure for developing economies returns to pre-pandemic rate of c.5%.

This is driven by tight monetary policies, softening labor markets, and the fading passthrough effects from earlier declines in relative prices, notably energy prices.

We understand that moderations in headline inflation have prompted central banks of select economies to slow down on further policy rate hikes.

For instance, the US Federal Reserve may consider rate cuts three times this year if macro-indicators align with expectations. Also, the UK and ECB are likely to reduce their level of policy restriction if they become more confident that inflation is moving towards the 2% target.

The growth forecast for sub-Saharan Africa remains steady at 3.8% y/y for 2024. The unchanged projection can be partly attributed to expectations around growth dynamics in Angola, notably contraction in its oil sector, which was offset by an upward revision for Nigeria’s GDP growth estimate.

For Nigeria, IMF revised its 2024 growth forecast upward to 3.3% y/y from 3.0% y/y (in its January ’24 WEO). This revision partly reflects the elevated oil price environment. Bonny Light has increased by 14.6% from the start of the year to USD89.3/b (as at April 2024).

Other upside risks include relatively stable growth in select sectors, improved fx market dynamics as well as ongoing restrictive monetary stance by the CBN.

Nigeria’s headline inflation has steadily recorded upticks (currently at 33.2% y/y as of March ‘24). Our end-year inflation forecast (base-case scenario) is 35.8% y/y. The ongoing geopolitical tension could exacerbate supply chain disruptions, driving commodity prices, and exerting pressure on purchasing
power.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Economy

World Bank VP Lauds CBN Governor Cardoso’s Inflation-Fighting Policies

Published

2 days ago

October 16, 2024

Bassey Marshall

The Senior Vice President of the World Bank, Indermit Gill, has praised the Governor of the Central Bank of Nigeria, Yemi Cardoso, over his approach to managing inflation in the country.

Gill made this known during his address at the 30th Nigerian Economic Summit organized by the Nigerian Economic Summit Group in Abuja, on Monday.

The World Bank VP decried the high cost of petrol occasioned by the subsidy removal of President Tinubu’s government and the untold hardship it has imposed on Nigerians.

However, he hailed the interest rate increase by the central bank which according to him will boost confidence in the Naira and anchor inflationary expectations.

Gill emphasized that Governor Cardoso through his policies has been steering Nigeria in the right direction.

Meanwhile, Gill noted that Nigeria is just in the beginning stage of reaping the benefits of these policies.

According to him, the country will need to sustain the momentum for a period of ten to seventeen years, before achieving the desired outcome.

He revealed that countries like India, Poland, Korea, and Norway have benefitted from the approach.

He said, “Implementing such a far-reaching reform is impossible without a solid political commitment from the top. The price of PMS has quadrupled since the subsidy cut, imposing terrible hardship across the breadth of Nigeria’s society.

“The Central Bank has had to hike its policy by a huge 850 basis point, almost 9 percentage points in the last month to boost confidence in the naira and anchor inflationary expectations.

“The Central Bank financing of fiscal deficit has finally ended, and Governor Cardoso has been putting Nigeria or helping to put Nigeria on the right course.”

“But this is only the beginning, Nigeria will need to stay the course for at least 10 to 17 years to transform its economy. If it does that, it will transform its economy.

“And it will become an engine of growth in Sub-Saharan Africa. And he will help to transform Sub-Saharan Africa. It’s very difficult to do these things, but the rewards are massive.

“This is the lesson from the last forty years as well as the experience of countries such as India, Poland, Korea and Norway,” Gill said.

Investors King reported that on September 24, 2024, the apex bank announced another increase in its Monetary Policy Rate (MPR) to 27.25% from 26.75 percent.

The decision was made during the Monetary Policy Committee (MPC) meeting chaired by CBN Governor, Yemi Cardoso.

Economy

Sanwo-Olu Unveils Lagos Red Line Rail For Commercial Operations

Published

2 days ago

October 16, 2024

Ugwoke Ogbodo

The Governor of Lagos State, Babajide Sanwo-Olu, has officially unveiled the LMRT Red Line for commercial operations.

The governor said the Red Line is the second rail system to become operational in less than two years in the state.

The 27-kilometre Red Line has eight stations at Oyingbo, Yaba, Mushin, Oshodi, Ikeja, Agege, Iju, and Agbado.

The train service is projected to transport about 500,000 Lagosians daily as the schedule is increased, providing a viable means of commuting.

In a post on his verified social media handles on Tuesday, Sanwo-Olu warned against vandalisation of the project, saying his government wouldn’t tolerate the destruction of public property.

Sanwo-Olu wrote, “Dear Lagosians, today marks the launch of commercial operations of the LMRT Red Line, commencing passenger services from Agbado to Oyingbo.

“We’re on a mission to keep Lagos moving, and the Red Line is a key part of our vision to create a seamlessly connected city. It is also our second rail system to become operational in less than two years.

“Spanning 27, the Red Line has eight stations at Oyingbo, Yaba, Mushin, Oshodi, Ikeja, Agege, Iju, and Agbado. The train service is projected to transport about 500,000 Lagosians daily as we ramp up the schedule and provide a viable means of commuting.”

He added that daily passenger services will depart from Agbado at 6:00 AM, with the second train leaving Iju Station at 7:30 AM.

“Ensure you have your Cowry Card ready to board,” he noted.

He urged residents to treat the project with the respect it deserves, stressing that “vandalism or disruptions will not be tolerated.”

He said, “Together, we can ensure that our trains remain a safe and enjoyable experience for everyone.”

Economy

Nationwide Blackout as National Grid Partially Collapses, Akwa Ibom Power Supply Remains Unaffected

Published

2 days ago

October 15, 2024

Yetunde Olugbenga

A partial collapse of the national grid has been reported by electricity distribution companies, resulting in a blackout in most parts of the country.

However, the Akwa Ibom Generating Station was “islanded,” allowing it to continue supplying electricity to neighboring cities.

The spokesperson for the Transmission Company of Nigeria (TCN), Ndidi Mbah, disclosed this during a chat on Monday evening.

Mbah explained that the Akwa Ibom Generating Station was “islanded” to enable continuous power supply through the Eket, Ekim, Uyo, and Itu 132-kilovolt substations.

“The entire system did not collapse, as the IBOM Generating Station was islanded (i.e., separated to stand alone and continue supplying some areas to avoid a total system failure), allowing it to supply electricity through the Eket, Ekim, Uyo, and Itu 132kV substations,” she said.

Mbah further disclosed that the collapsed national grid was partial as TCN has begun system recovery to restore normalcy in the affected area.

“Recovery is currently ongoing and has advanced significantly.” She said.

Mbah’s disclosure about the Akwa Ibom generating station being “islanded” came shortly after Emeka Ezeh, Head of Corporate Communications at the Enugu Electricity Distribution Company (EEDC), confirmed the national grid’s collapse around 6:48 p.m. on Monday.

“…of a general system collapse that occurred at 18:48 hours today, 14th October 2024.” He stated.

Speaking about how to restore power, a statement signed by Ezeh revealed that the EEDC is on standby to restore supply from Osogbo.

“We are on standby awaiting detailed information of the collapse and restoration of supply from the National Control Centre (NCC), Osogbo,” the statement read.

“Rest assured, we are working with the relevant stakeholders to restore power as soon as the grid is stabilised. Thank you for your understanding”, the statement indicated.

The Abuja Disco also reported the grid collapse at 6:58 p.m.

“Dear Valued Customer, Please be informed that the power outage being experienced is due to a system failure from the national grid at 6:58 pm today, affecting the power supply to our franchise areas”, the Abuja Disco declared.

It was reported that the collapsed electricity grid has vehemently thrown the nation into a blackout. Moreover, at the time of this report, power supply is yet to be restored across parts of the country.