The International Monetary Fund (IMF) has downgraded Nigeria's growth outlook due to challenges such as low crude oil production and severe flooding. In its latest World Economic Outlook (WEO) report, the IMF reduced Nigeria’s 2024 growth forecast to 2.9% from the previously projected 3.3%. The revision reflects the impact of inflation, flooding, and oil production disruptions on the economy.

Globally, the IMF maintained its 2025 economic growth projection at 3.2%, although this represents a slight 0.1% decline from the July 2024 forecast. For Nigeria, the IMF anticipates a modest 0.2% GDP growth increase by 2025, compared to previous estimates. However, the 2.9% GDP growth forecast for 2024 remains a downgrade from the July 2023 projection.

On inflation, the IMF projects Nigeria's inflation rate to remain at 25% in 2025, eventually easing to 14% by 2029. In the first two quarters of 2024, the economy grew by 2.98% and 3.19%, respectively, despite rising inflation and the depreciation of the naira. The report highlights the resilience of Nigeria’s economy amid shocks, such as the spike in petrol prices and inflation reaching a 28-year high.

Inflation, which had been rising consistently since January 2023, only began to slow down in July 2024. However, after two months of relief, inflation resumed its upward trend following another petrol price hike by the Nigerian National Petroleum Company Limited (NNPCL) in September.

The IMF attributed the lower growth forecast to agricultural disruptions caused by flooding and ongoing security and maintenance challenges in the oil sector. Jean-Marc Natal, IMF’s Research Department division chief, emphasized that these factors were key drivers of the revision.

“Over the last year and a half, there has been some progress. Inflation has stabilized in some countries, even nearing targets. However, many economies in the region still experience high inflation and heavy debt burdens,” Natal said. “Growth remains uneven and too low, with debt service still high across the region.”

Despite the challenges, Jason Wu, Assistant Director in the IMF’s Monetary and Capital Markets Department, noted that Nigeria’s economic reforms are setting the country on a path toward stability.

Meanwhile, severe flooding continues to devastate several parts of Nigeria, with Maiduguri among the hardest-hit areas. The World Bank also reported that inflation in the country had risen for 13 consecutive months, driven by the removal of fuel subsidies, rising transportation and production costs, and the weakening naira.

A breakdown of the National Bureau of Statistics inflation report showed a steady increase in consumer prices, with inflation rising from 22.41% in May 2023 to 24.08% in July. By December 2023, inflation had climbed to 28.92%, driven by higher food, energy, and essential goods prices.

In 2024, inflation peaked at 34.19% in June before slightly easing to 32.70% in September. Persistent inflation has been compounded by low crude oil production, which has been hampered by pipeline vandalism and oil theft, further straining the country’s economic recovery efforts.