By Rita Uzuh
October 22, 2024

The International Monetary Fund (IMF) has lowered its growth projections for sub-Saharan Africa (SSA) in 2024, citing Nigeria’s weaker-than-expected economic activity in the first half of the year as a major factor. This was revealed in the IMF’s World Economic Outlook, released in October 2024.

The IMF has downgraded the region’s growth forecast by 0.2 percentage points for 2024 and by 0.1 percentage points for 2025, compared to earlier predictions made in April. According to the report, the ongoing conflict in South Sudan, which has caused a 26 percent contraction in its economy, and the slower-than-anticipated growth in Nigeria contributed significantly to the revised forecast.

“Besides the ongoing conflict that has led to a 26 percent contraction of the South Sudanese economy, the revision reflects slower growth in Nigeria, amid weaker-than-expected activity in the first half of the year,” the IMF stated.

Despite these setbacks, the IMF projects that SSA’s GDP growth will improve from an estimated 3.6 percent in 2023 to 4.2 percent by 2025, as adverse weather effects ease and supply chain constraints diminish.

Nigeria’s Growth Outlook

For Nigeria specifically, the IMF forecasts economic growth of 3.5 percent in 2024, with a slight increase to 3.7 percent in 2025. This follows the National Bureau of Statistics’ (NBS) report showing Nigeria’s GDP grew by 3.19 percent year-on-year in the second quarter of 2024.

Global Context and Emerging Markets

On the global stage, the IMF noted that while its overall growth projections have seen minimal revisions since April, there have been offsetting changes at the regional and country levels, particularly among emerging markets and developing economies. Factors like reduced production and shipping of key commodities, conflicts, and civil unrest have contributed to downward revisions for regions such as SSA, the Middle East, and Central Asia.

Meanwhile, emerging Asia, particularly China and India, has seen an upward revision, thanks to surging demand for semiconductors and electronics, spurred by significant investment in artificial intelligence.

Inflationary Pressures

The IMF also highlighted persistent inflation challenges for SSA, the Middle East, and other regions, driven by factors such as past currency depreciation, administrative price adjustments, and underperformance in agriculture. For SSA, inflation remains high due to large outliers like Ethiopia, where agricultural underperformance has been a significant issue.

Despite these challenges, the IMF remains cautiously optimistic about long-term recovery prospects for sub-Saharan Africa, particularly as structural issues are addressed and global economic conditions improve.