Nigeria’s Economy Indicating Significant Shift In Inflation Rates – IMF

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By;  AMOS TAUNA, Kaduna 

The IMF has provided projections for Nigeria’s economy, indicating a significant shift in inflation rates.

The International Monetary Fund/World Bank Spring Meetings in Washington D.C., on Tuesday, in a recent release of its Global Economic Outlook, the Division Chief of the IMF Research Department, Daniel Leigh, highlighted the impact of Nigeria’s economic reforms, including exchange rate adjustments that led to a surge in inflation rate to 33.2 per cent in March.

It said that the Nigeria’s inflation rate rose to 33.2 per cent according to recent data released by the National Bureau of Statistics, saying that the food inflation rate increased to over 40 per cent in the first quarter of 2024.

According to Leigh, “We see inflation declining to 23 per cent next year and then 18 per cent in 2026.”

He explained that it is different from the fund’s prediction of a new single-digit (15.5 per cent ) inflation rate for 2025 which it predicted last year.

He further stated that Nigeria’s economic growth is expected to rise from 2.9 per cent last year to 3.3 per cent this year, following the expansion to the recovery in the oil sector, improved security, and advancements in agriculture due to better weather conditions and the introduction of dry season farming.

The IMF official also noted a broad-based increase in Nigeria’s financial and IT sectors.

Leigh explained that inflation has increased, reflecting the reforms, the exchange rate, and its pass-through into other goods from imports to other goods.

According to him, the IMF revised its inflation projection for the current year to 26 per cent but emphasised that tight monetary policies and significant interest rate increases during February and March are expected to curb inflation.

Pierre Olivier Gourinchas, an official of the IMF Research Department, commented on the global economic landscape, mentioning that oil prices have risen partly due to geopolitical tensions, and services inflation remains high in many countries.

Gourinchas stressed that bringing inflation back to target should be the priority, despite Nigeria’s inflation target of six to nine percent being missed for over a decade.

He advised on the need for careful calibration of monetary policy, warning of the risks posed by geo-economic fragmentation to global growth prospects.

He noted that trade linkages are changing, and while some economies could benefit from the reconfiguration of global supply chains, the overall impact may be a loss of efficiency, reducing global economic resilience.

To maintain a resilient global financial system and prevent a permanent resurgence in inflation, he emphasised the importance of preserving the improvements in monetary, fiscal, and financial policy frameworks, particularly for emerging market economies.

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