The International Monetary Fund has sounded the alarm regarding the adverse effects of high inflation on the consumption of goods and services, and it has downgraded its economic growth projection for Nigeria from 3.3 percent to 2.9 percent.

The IMF expressed concern about the impact of high inflation on the affordability of basic goods and services. To counter rising inflation, the IMF called for further interest rate hikes.

At the same time, it acknowledged the potential for stronger economic growth in Nigeria due to recent reforms implemented by the Federal Government, such as the removal of fuel subsidies and the elimination of multiple exchange rates.

The IMF’s latest economic forecasts were released as part of its World Economic Outlook report for October 2023, presented during the ongoing World Bank/IMF Annual Meetings in Marrakesh, Morocco on Tuesday.

The revised economic growth forecast for Nigeria is 0.3 percentage points lower than the IMF’s previous projection in July and significantly below the Federal Government’s projection of 3.75 percent in the 2023 budget.

The IMF maintained its global economic growth forecast at 3.0 percent.

In its assessment, the IMF noted that “the global economy is limping along, not sprinting,” with projections indicating a slowdown in world economic growth from 3.5 percent in 2022 to 3 percent in the current year and 2.9 percent next year.

The IMF’s forecast for 2024 is a 0.1 percentage point downgrade from its previous projection in July.

IMF’s forecast for sub-Saharan Africa indicated a decline in growth to 3.3 percent in 2023 before a potential pickup to 4.0 percent in 2024.

This projection includes downward revisions for both 2023 and 2024 and reflects various factors, including worsening weather shocks, the global economic slowdown, and domestic supply issues.

The IMF also called for additional interest rate hikes in Nigeria and other countries to combat the persistent rise in inflation.

Despite multiple interest rate increases by the Central Bank of Nigeria, inflation has continued to climb, reaching 25.8 percent in August, the highest in a decade.

The IMF emphasized the importance of maintaining monetary policy focused on price stability to address cost-of-living challenges and bolster macroeconomic resilience.

The IMF stated, “To ensure a more stable and sustained recovery, it is important that country authorities in Africa guard against any premature monetary policy easing and remain committed to their fiscal consolidation plans. Monetary policy efforts should remain tightly focused on price stability.”