During the International Monetary Fund/World Bank Spring Meetings in Washington D.C., the IMF unveiled its latest Global Economic Outlook, projecting a significant decline in Nigeria’s inflation rates in the coming years.
Daniel Leigh, Division Chief of the IMF Research Department, highlighted Nigeria’s ongoing economic reforms, such as exchange rate adjustments, as catalysts for the recent surge in inflation to 33.2 percent in March.
According to recent data from the National Bureau of Statistics, Nigeria’s inflation rate soared to 33.2 percent, with food inflation exceeding 40 percent in the first quarter of 2024.
Leigh announced, “We anticipate a notable drop in inflation to 23 percent next year, followed by a further decrease to 18 percent by 2026.”
This projection marks a departure from last year’s IMF forecast of a single-digit inflation rate of 15.5 percent for 2025.
Discussing Nigeria’s economic growth trajectory, Leigh predicted a rise from 2.9 percent in the previous year to 3.3 percent in the current year. He attributed this growth to the recovery in the oil sector, enhanced security measures, and advancements in agriculture driven by favorable weather conditions and the adoption of dry season farming.
Furthermore, the IMF official highlighted substantial growth in Nigeria’s financial and IT sectors.
“Inflation has risen due to reforms, exchange rate adjustments, and their trickle-down effects on imported goods,” explained Leigh.
While revising the IMF’s inflation projection for the current year to 26 percent, Leigh emphasized the anticipated effectiveness of tight monetary policies and significant interest rate hikes implemented during February and March in curbing inflation.
Pierre Olivier Gourinchas, an official from the IMF Research Department, provided insights into the global economic landscape, noting the impact of rising oil prices attributed in part to geopolitical tensions and persistent high services inflation in several countries.
Despite Nigeria’s failure to meet its inflation target of six to nine percent for over a decade, Gourinchas underscored the paramount importance of restoring inflation to target levels.
He cautioned against the risks posed by geo-economic fragmentation to global growth prospects and advocated for the meticulous calibration of monetary policy.
“Changes in trade linkages necessitate a cautious approach, as while some economies may benefit from the reorganization of global supply chains, there could be an overall efficiency loss, diminishing global economic resilience,” Gourinchas remarked.
He further stressed the significance of preserving improvements in monetary, fiscal, and financial policy frameworks, particularly for emerging market economies, to sustain a robust global financial system and prevent a lasting resurgence in inflation.
