Nigeria’s economic growth accelerated in the second quoarter of 2024 (Q2 2024), driven by a rise in crude oil output that mitigated the negative effects of the Naira’s devaluation on non-oil sectors.
The country’s gross domestic product (GDP) expanded by 3.19% annually in the three months ending in June 2024, up from 2.98% in the previous quarter (Q1 2024), according to data from the National Bureau of Statistics in Abuja. This growth rate aligns with the median forecast of four economists surveyed by Bloomberg.
Economic reforms introduced by President Bola Tinubu since May 2023 have spurred growth by attracting foreign investment.
Just 15 days into the job, Nigeria’s President Bola Tinubu has pulled the right levers for markets: ridding the country of a costly fuel subsidy, removing a controversial central bank governor, and promising to unify varying exchange rates
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— Bloomberg Africa (@BloombergAfrica) June 13, 2023
The government aims for a 3.8% growth rate for this year (2024), up from 2.7% last year (2023), and is targeting a return to a 6% growth rate, last achieved in 2014, in the coming years, according to Finance Minister, Wale Edun.
Despite these positive developments, inflation is expected to stabilize around 28% by the end of 2024. Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered Bank, anticipates that achieving a growth rate above 4% will likely not happen until 2025.
🇳🇬INFLATION | Nigeria’s Inflation Rises to 28-Year High in May 2024 Driven By High Food Prices and $NAIRA Devaluation
Analysts attribute the main drivers of inflation in #Nigeria to high food prices and a weaker Naira in addition to the government also floating the Naira in an… pic.twitter.com/KJu8WCba6R
— BitKE (@BitcoinKE) June 17, 2024
Nevertheless, sustained increases in oil production could bring growth closer to the government’s targets. In Q2 2024, crude production rose to 1.41 million barrels per day, up from 1.22 million barrels per day a year earlier. Oritsemeyiwa Eyesan, Executive Vice President of the Nigerian National Petroleum Corporation’s upstream division, forecasts daily output will reach approximately 2 million barrels per day by year-end.
In contrast, the non-oil sector grew by 2.8% during this period, down from 3.6% a year earlier, with agriculture slowing to a growth rate of 1.4% from 1.5%. Brendon Verster, an economist at Oxford Economics Africa, expects growth to decelerate in the second half of the year, projecting an overall expansion of 2.6% for 2024. He noted that Nigeria’s purchasing managers index fell below the 50-point threshold in July 2024, reaching its lowest level since November 2023.
The International Monetary Fund (IMF) is somewhat more optimistic, forecasting a 3.3% growth rate for Nigeria in 2024. Despite this, Nigeria is expected to remain the fourth-largest economy in Africa, behind South Africa, Egypt, and Algeria.
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