Where is the Nigerian economy headed?
Nigeria's digital future. Source: IFC

In 122 days, the 2023 elections will hold, and Nigeria will transition to a new administration by the middle of the new year.

While it’s difficult to say who would hold the mantle for the “new Nigeria,” what’s evident is that whoever inherits the country next year will not only carry the burden of Nigeria’s current macroeconomic problems (high inflation, rising debt, insecurity, etc.) but have to make tough and necessary decisions to revitalise the economy. 

 

Key takeaways:

  1. There is a 98.1% chance the world will slide into a recession, with growth predicted to fall to 2.7% in 2023. 

  2. The slowdown in the global economy will trickle down to sub-Saharan Africa in the form of food insecurity, higher debt burdens and reduced economic activities.  

  3. Nigeria is not left out of the economic downturn. According to the IMF, the country’s growth will slow to 3% next year, while annual inflation will remain high at 17.3%.

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But what will Nigeria’s economic state look like by then? This question is the motivation for today’s story. Thankfully, the International Monetary Fund (IMF) has its World Economic Output report for October 2022, which made predictions about the country. We will focus our analysis on GDP growth and inflation. Why? Because politicians and policymakers often fixate on growth as a trophy for a job well done. An example is the APC’s plan to deliver 10% yearly growth for the next five years. Meanwhile, we are looking at inflation because it is now a global problem.

Before we take a broad look at Nigeria, we will briefly provide an overview and outlook on the health of the global and regional economies (sub-Saharan Africa). We are doing this for two reasons: First, Nigeria does not exist in a vacuum. Rising prices brought on by Russia's invasion of Ukraine and high-interest rates in America directly affect the country. The second is that Nigeria, and South Africa, are the two largest economies in sub-Saharan Africa (SSA) by GDP and often dictate the region's direction and pace of growth. So, if the IMF believes that SSA GDP growth will fall, Nigeria’s GDP growth will either decline or contract.

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Dumebi Oluwole

Dumebi Oluwole

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