President Bola Tinubu stood firm in defense of Nigeria’s recent tough economic decisions during his address at the World Economic Forum in Riyadh, Saudi Arabia.

Speaking to a gathering of global business leaders, Tinubu justified the removal of fuel subsidies and the management of Nigeria’s foreign exchange market as necessary measures to prevent the country from bankruptcy and reset its economy towards growth.

In his speech, Tinubu acknowledged the challenges and drawbacks associated with these decisions but emphasized that they were in the best interest of Nigeria.

He described the removal of fuel subsidies as a difficult yet essential action to avert bankruptcy and ensure the country’s economic stability.

Despite the expected difficulties, Tinubu highlighted the government’s efforts to implement parallel arrangements to cushion the impact on vulnerable populations, demonstrating a commitment to inclusive governance.

Regarding the management of the foreign exchange market, Tinubu emphasized the need to remove artificial value elements in Nigeria’s currency to foster competitiveness and transparency.

While acknowledging the turbulence associated with such decisions, he underscored the government’s preparedness to manage the challenges through inclusive governance and effective communication with the public.

Moreover, Tinubu used the platform to call on the global community to pay attention to the root causes of poverty and instability in Africa’s Sahel region.

He emphasized the importance of economic collaborations and inclusiveness in achieving stability and growth, urging bigger economies to actively participate in promoting prosperity in the region.

Tinubu’s defense of Nigeria’s economic policies reflects the government’s commitment to making tough but necessary decisions to steer the country towards sustainable growth and development.

As the world grapples with geopolitical tensions, inflation, and supply chain disruptions, Tinubu’s message at the World Economic Forum underscores the importance of collaborative action and inclusive governance in addressing critical global challenges.

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.

The Federal Government of Nigeria is on the brink of achieving a significant milestone as it prepares to finalize the Gas Supply and Purchase Agreement (GSPA) for the $3.8 billion Brass Methanol Project.

The agreement to be signed in May 2024 marks a pivotal step in the country’s journey toward industrialization and self-sufficiency in methanol production.

The Brass Methanol Project, located in Bayelsa State, is a flagship industrial endeavor aimed at harnessing Nigeria’s abundant natural gas resources to produce methanol, a vital chemical used in various industrial processes.

With Nigeria currently reliant on imported methanol, this project holds immense promise for reducing dependency on foreign supplies and stimulating economic growth.

Upon completion, the Brass Methanol Project is expected to have a daily production capacity of 10,000 tonnes of methanol, positioning Nigeria as a major player in the global methanol market.

Furthermore, the project is projected to create up to 15,000 jobs during its construction phase, providing a significant boost to employment opportunities in the country.

The successful execution of the GSPA is essential to ensuring uninterrupted gas supply to the Brass Methanol Project.

Key stakeholders, including the Nigerian National Petroleum Company Limited and the Nigerian Content Development & Monitoring Board, are working closely to finalize the agreement and pave the way for the project’s advancement.

Speaking on the significance of the project, Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, emphasized President Bola Tinubu’s keen interest in expediting the Brass Methanol Project.

Ekpo reaffirmed the government’s commitment to facilitating the project’s success and harnessing its potential to attract foreign direct investment and drive economic development.

The Brass Methanol Project represents a major stride toward achieving Nigeria’s industrialization goals and unlocking the full potential of its natural resources.

As the country prepares to seal the deal in May 2024, anticipation grows for the transformative impact that this landmark project will have on Nigeria’s economy and industrial landscape.