Bismarck Rewane, the Chief Executive Officer at Financial Derivatives Company, has made a projection that Nigeria’s economy is set to grow by 3.3% in 2024, up from the expected 2.61% growth in 2023. These forecasts were presented during the Wealth and Economic Review Webinar hosted by Alpha Morgan Capital on Tuesday.
Key Points:
- Economic Growth Projection: Rewane anticipates a 3.3% growth for Nigeria’s economy in 2024, portraying a more optimistic picture compared to the expected growth of 2.61% in 2023.
- Inflation Forecast: The economist forecasts a reduction in inflation to 20.1% in 2024 from the projected 28.7% in 2023. He attributes the slowdown in inflationary pressures to the decrease in Nigeria’s imported inflation.
- Global Integration and Competitiveness: Nigeria’s global economic and trade share is declining, making the country more integrated with the global economy but less competitive. Rewane emphasizes the potential impact of a slowdown in Europe’s economy on Nigeria’s exports.
- Currency and Interest Rates: The lowering of US interest rates is expected to reduce the strength of the dollar against the naira. This, in turn, may lead to a reduction in capital flight and naira volatility.
- International Market Access: Nigeria might face challenges accessing the international market due to elevated interest rates, leading to a reliance on domestic borrowing for expenditure.
- Debt Situation: While noting that Nigeria is unlikely to default on its debt, Rewane suggests that debt restructuring might become imminent.
- Political Landscape: In 2024, the political landscape is expected to be challenging for the president, with a dilemma between market reforms and a weak political mandate. The implementation of market and institutional reforms is considered crucial for sustainable economic growth.
- Security Concerns: Nigeria’s security situation is described as fragile, limiting the government’s ability to pursue market reforms. Pressure from labor unions is anticipated, and there are concerns about the future of the federal structure due to widespread poverty and ethno-religious divides.
- Global Investment Landscape: A slowing global economy and the possibility of a recession are expected to exert pressure on corporate profits and asset prices. Investors are likely to focus on securities offering higher yields and companies with quality cash flows and realistic earnings goals.
- Central Bank Actions: While central banks in advanced economies may initiate rate cuts, interest rates are predicted to remain elevated.
Conclusion: Bismarck Rewane’s economic forecasts for 2024 provide insights into the potential trajectory of Nigeria’s economy. The projections highlight the interconnectedness of Nigeria with the global economy, the challenges posed by inflation and global economic trends, and the importance of political and institutional reforms for sustained growth. The overall tone suggests cautious optimism, acknowledging both opportunities and challenges on the economic horizon.
