Nigeria’s Gross Domestic Product, GDP growth rate has been projected to be within the range of 2.6 or 3 percent this year.
This is according to Pan-African Credit Rating Agency, Agusto & Co, which outlined three possible projections for Nigeria’s Gross Domestic Product, GDP growth at the end of 2024.
The agency’s Head, Financial Institutions Ratings, Mr. Ayokunle Olubunmi made this known at the bi-monthly forum of the Finance Correspondents Association of Nigeria in Lagos.
Olubunmi explained that by the end of this year, GDP is expected to grow at 2.6 to 3 percent, but not expected to exceed 5 percent this year.
He further identified and explained the three major economic variables that are likely to have a far-reaching impact on Nigeria’s GDP growth in 2024 as; interest rate, Inflation, and the exchange rate.
On interest rates, Olubunmi said: “Everything in Nigeria today points towards higher interest rates due to the pressure on the Naira occassioned by the low-interest rate environment.”
While stressing that high interest rates moderate economic activities, he stated that the expectation was that the Monetary Policy Committee of the CBN would increase interest rates by about 500 basis points at the forthcoming MPC meeting later this month.
He, however, explained that due to borrowing, the MPC might be discouraged from raising the rates too high as higher interest rate would also amount to higher cost of government services.
Olubunmi therefore stated that the average interest rate for the year might hover around 18 percent (best case scenario) and 16 percent (base case scenario) while it is expected that interest rate will not decrease below 15 percent ( worst case scenario).
Inflation
According to him, the increase in exchange rate also affects inflation and, rising cost of importation will have an effect on the inflationary situation which will invariably affect growth.
Olubunmi emphasised that a lot of factors affect inflation and the projection of the CBN governor Olayemi Cardoso can only be realised if all the countervailing variables have been addressed.
To this effect, he stated that the best case scenario for inflation targeting is 21 percent, base case or average inflation rate for 2024 he said would be 26.1 percent while the worst case scenario would be 28.2 percent.
He also stated that Nigeria’s foreign exchange earnings this year would depend majorly on oil revenue while the price of crude oil which averaged $80pb in 2023 will likely settle around $70 to $75pb in 2024 with Nigeria projected to produce not more than 1.5 barrels per day in 2024.
Hauwa Abu
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