INFLATION IN NIGERIA PROJECTED TO EASE TO 23% IN 2025
Daniel Leigh, the division chief of the IMF Research Department, has projected that Nigeria’s inflation rate will decline by 23 percent next year and 18 percent in 2026.
This is however different from the fund’s prediction of a new single-digit (15.5 per cent ) inflation rate for 2025 which it predicted last year.
Nigeria’s Inflation Forecast Revised: Relief Expected in 2025
The International Monetary Fund (IMF) recently released its Global Economic Outlook at the World Bank Spring Meetings, offering projections for Nigeria’s economy. A key takeaway is a shift in the country’s inflation rate.
Inflation on the Rise
Daniel Leigh, head of a division within the IMF’s research department, acknowledged the impact of Nigeria’s economic reforms, including adjustments to exchange rates. These reforms, while intended for long-term benefits, have caused a temporary surge in inflation. Data from the National Bureau of Statistics shows a national inflation rate of 33.2% in March 2024, with food prices rising even higher (over 40%).
Shifting Predictions
The IMF has revised its inflation projections for Nigeria. While they previously predicted a single-digit rate (15.5%) for 2025, they now forecast a decline to 23% next year, followed by a further drop to 18% in 2026.
Reasons for Optimism
Despite the inflation challenges, the IMF foresees some positive developments in Nigeria’s economy. Growth is expected to climb from 2.9% in 2023 to 3.3% in 2024. This expansion is attributed to factors like a recovering oil sector, improved security conditions, and advancements in agriculture (thanks to better weather and the introduction of dry season farming techniques). Additionally, the IMF sees growth in Nigeria’s financial and IT sectors.
Combating Inflation
The IMF acknowledges the rise in inflation is a consequence of the implemented reforms, particularly the exchange rate adjustments. They believe the tight monetary policies and significant interest rate hikes enacted in February and March will help curb inflation. The revised projection for 2024 is now 26%.
Global Context
The IMF also commented on broader global trends. Oil prices have increased due to geopolitical tensions, and many countries are experiencing high service sector inflation.
A Priority: Taming Inflation
Despite Nigeria missing its inflation target (6-9%) for over a decade, the IMF emphasizes the importance of bringing it back down as a top priority.
Challenges and Solutions
The IMF warns of potential risks to global growth due to geo-economic fragmentation. They also highlight the need for careful calibration of monetary policy. Trade patterns are shifting, and while some economies might benefit from these changes, there’s a risk of reduced global efficiency and resilience. The IMF emphasizes the importance of maintaining robust monetary, fiscal, and financial frameworks, especially for emerging market economies. This will be crucial for a resilient global financial system and preventing a permanent resurgence of inflation.
https://statisticss.com/2024/04/19/inflation-in-nig…se-to-23-in-2025/
Source: Techeconomy
