Last year’s economic shocks left a lasting impact on many Nigerians, who now hold high hopes for a turnaround in 2024. Various economic experts and analysts are optimistic that the nation’s economy will witness a positive shift this year, fueled by the recovery of the oil sector from recession and the positive implications of the government’s reforms. In his nationwide address on the first day of the year 2024, President Bola Tinubu acknowledged the prevalent hardship and advised Nigerians to stand resolute. He assured of the government’s unwavering dedication to enhancing the well-being of every individual in the country.
An economist and fixed-income strategist at CardinalStone, Olaolu Boboye, shares a positive outlook on economic growth, attributing it to the anticipated rebound of the oil sector following years recession. Boboye predicts boosted oil production as the government prioritizes offshore exploration, which is less susceptible to theft. Furthermore, he believes the non-oil sector will remain resilient, driven by the services industry and gradual recoveries in both agriculture and manufacturing. Afrinvest Limiteds analysts have expressed cautious optimism for the year 2024, based on the strong liquidity dynamics and positive expectations regarding inflation and interest rates.
Decline in inflation is expected in the second half of 2024.
In their scenario models, the projected figures for GDP growth, inflation, and FX rate in the optimistic 2024 case would be 3.0 percent, 22.1 percent, and ₦918.89/$1 respectively. However, if policy fatigue and external risks become more intense, the average outcomes could worsen to -1.5 percent, 24.7 percent, and ₦1,057.19/$1. It is expected that the Central Bank of Nigeria (CBN) may respond to significant inflows by adopting a more restrictive approach in the initial half of the year. This could be a major catalyst for substantial yields.
Cordros Securities Limited analysts predict a positive shift in the local macroeconomic landscape compared to 2023. Their optimism is based on the gradual reduction of the current effects of petrol subsidy and foreign exchange reforms on the non-oil sector. They also anticipate higher levels of crude oil production, supported by favorable oil prices. The analysts hope for an enhancement in FX supply that aligns with the authorities expectations regarding FX inflows from international bank agreements. Also, they anticipate a decline in inflation in the second half of 2024.
Implemented reforms projected to reverse the rise in poverty.
According to the most recent development report by the World Bank concerning Nigeria, the reforms implemented are projected to reverse the rise in poverty observed in recent years starting from 2024. However, these improvements are anticipated to be minimal and occur at a slow pace. Accelerating monetary policy tightening should result in a gradual decrease in inflation in 2024 and beyond. The rise in prices for certain goods due to the fuel subsidy reform has caused headline inflation to surge from an average of 18.8 percent in 2022 to 24 percent in 2023. Nevertheless, fiscal consolidation is expected to transform the subsidy reform into a disinflationary measure from the first half of 2024.
This action will result in a decrease in funding from the CBN, ultimately leading to a reduction in the growth of money supply and minimizing the effects of the initial significant rise in gasoline prices. Vetiva Capital Research suggests that Nigeria will experience a fine balance between favorable prospects and challenges in the year 2024. The country’s growth prospects continue to depend on oil production, but the possibility of enhanced refining operations could act as a potential catalyst. However, fuel subsidy removal and the resulting surge in inflation, along with a continuous tightening of monetary measures and low net reserve are major concerns.
Stricter immigration policies would reduce the ‘Japa’ rate.
A research assistant at the Public Sector Initiative at Lagos Business School, Lasisi Lukman, foresees a potential increase in Nigeria’s unemployment rate from 4.2 percent in Q2 2023 to approximately 8-10 percent in 2024, due to the prevailing economic situation. Lukman further suggests that the implementation of stricter immigration policies by foreign countries would reduce the ‘Japa’ rate. SBM Intelligence’s forecast that year 2024 will witness a sustained constraint on consumer spending, causing a decline in non-essential expenses. Furthermore, an upsurge in diaspora remittances is expected as a consequence of an increasing number of Nigerians relocating overseas in search of employment opportunities.
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