ECONOMIST INTELLIGENCE UNIT REVISITS NIGERIA’S 2024 ECONOMIC GROWTH PROJECTION, UPGRADES TO 2.5%
Over the weekend, The Economist Intelligence Unit (EIU) revised Nigeria’s economic growth forecast for 2024 from 2.2% to 2.5%, attributing the upward adjustment to the country’s increasing crude oil output. The organization’s latest country report outlined that the prediction was based not only on higher-than-expected crude production but also on the anticipated early production from Nigeria’s new mega-refinery.
The EIU, the research and analysis division of the Economist Group, offers forecasting and advisory services, including monthly country reports, five-year country economic forecasts, country risk service reports, and industry reports.
Hydrocarbons contribute around 50% of the government’s revenue and over 80% of export receipts, with agriculture and services overshadowing the industry’s impact on the Gross Domestic Product (GDP). The EIU noted that the oil sector constitutes approximately 6% of GDP. Despite a more stringent monetary tightening in February 2024, the EIU raised its growth forecast, expecting the Central Bank of Nigeria’s policy rate to peak at 23.75%, 200 basis points higher than their previous estimate.
Regarding President Bola Tinubu’s administration reforms, the EIU highlighted that market reforms aimed to attract investments but lacked a coherent plan. The elimination of petrol subsidies and the liberalization of the exchange rate, considered flagship policies, were seen to have an inner contradiction.
The report emphasized the challenges in the Nigerian business environment, citing corruption, cronyism, rampant insecurity, and a significant infrastructure gap as key undermining factors.
Multinationals were noted to be increasingly exiting or reducing their presence in Nigeria, with a net withdrawal of Foreign Direct Investments (FDI) in 2023, expected to repeat in 2024 due to naira losses impacting balance sheets carrying substantial foreign liabilities.
The EIU predicted a rise in Nigeria’s crude oil production from 1.23 million bpd in 2023 to 1.48 million bpd in 2028, although still below the 2019 level by about 250,000 bpd. In January, Nigeria.
However, Nigeria hit 1.42 million bpd in January and from all indications, is expected to exceed that in the production February circle when the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) releases the output data.
