The World Bank’s latest report, titled “Global Economic Prospect: Subdued Growth, Multiple Challenges,” forecasts a 3.7% growth in Nigeria’s Gross Domestic Product (GDP) for 2025.
This projection marks an improvement from the earlier estimate of 2.9% for 2023, attributing the momentum to ongoing macro-fiscal reforms initiated by President Bola Tinubu.
The report highlights the removal of fuel subsidies, foreign exchange rate harmonization, and a focus on infrastructure, manufacturing, and technology.
The World Bank anticipates that Nigeria’s economic growth will be driven by key sectors such as agriculture, construction, services, and trade.
Despite economic progress, the report notes a concerning 133% increase in the number of Nigerians facing food insecurity over the past three years.
Acknowledging a softening of the economy to an estimated 2.9% in 2023 due to disruptive policies, such as currency demonetization, the World Bank expects gradual improvement.
It emphasizes that inflation should ease with the fading effects of exchange rate reforms and fuel subsidy removal.
Structural reforms are anticipated to boost fiscal revenue over the forecast period.
While Nigeria’s GDP reached N60.66tn in Q3 2023, growing at 2.54%, concerns persist regarding rising public debt, persistent inflation, high living costs, and a weak business environment.
In December 2023, the country experienced a 21-year high inflation rate of 28.92%. Public debt rose to N87.91trn in Q3 2023, as reported by the Debt Management Office.
The United Nations, in its ‘World Economic Situation and Prospects 2024’ report, highlights the challenge African countries face with deteriorating fiscal positions due to high public debt and a low domestic revenue base.
Efforts to increase oil refining capacity are expected to reduce domestic fuel costs in 2024, providing some relief to governments facing tight fiscal spaces through energy subsidy reforms and tax hikes in various countries.
