Macroeconomic Performance
Table 1: Overview of some macroeconomic indicators
The Nigerian economy slowed to a growth of 2.9 per cent in 2023, from 3.3 per cent in 2022, with high prices and a declining agriculture sector growth constraining growth. Average inflation increased to 24.7 per cent in 2023, from 18.8 per cent in 2022, owing to a confluence of factors, including the depreciation of the naira as well as high food and energy (from the partial removal of fuel subsidies) prices. Fiscal balance improved to -4.2 per cent of GDP in 2023, as revenue growth outstripped the growth in expenditure, with the debt-to-GDP ratio increasing to 46.3 per cent of GDP in 2023, from 39.4 per cent in 2022. Current account balance remained in the surplus of 0.3 per cent of GDP in 2023 from 0.2 per cent in 2022 as a result of lower imports compared to the prior year.
Outlook
Nigeria’s economy is projected to grow by 3.3 per cent in 2024 before declining marginally to 3.2 per cent in 2025. This growth in economic activity will be supported by increased private demand and petroleum sector growth, spurred by higher crude oil prices and increased domestic refinery. Apart from the impact of the ramp-up phase of the Dangote oil refinery, the government is set to commission three gas processing infrastructures, which will add approximately 500 million standard cubic feet of gas per day to the domestic market. This will boost the growth in economic activity in the near term. Average inflation is projected to initially inch up in 2024 to 26.3 per cent, moderating to 21.5 per cent in 2025, as the devaluation and subsequent depreciation of the naira and high food and energy prices trigger an increase in the cost of goods and services. Fiscal balance is projected to worsen to -4.6 per cent of GDP in 2024 as the government absorbs the impact of the remaining fuel subsidies, improving to -4.2 per cent in 2025. The improved domestic crude oil refinery and oil price increases will sustain the gains in the current account balance, stabilising at 0.3 per cent of GDP in 2024 before declining marginally to 0.2 per cent in 2025, as the naira stabilisation encourages increased imports. The debt-to-GDP ratio will increase consistently to 46.6 per cent of GDP in 2024 and to 46.8 per cent in 2025.
Probable Headwinds
Risks to the projections include insecurity from the insurgents in the northern part of Nigeria, which will affect agriculture output. Furthermore, the continuous depreciation of the naira will feed into inflation, which will, in turn, suppress the growth in economic activity. Fiscal slippages arising from increased petroleum subsidies and general revenue underperformance will pose serious