The Organization of the Petroleum Exporting Countries (OPEC) has reported that Nigeria’s economic growth in the first quarter of 2023 was 2.4% year-on-year (y-o-y). This represents a decrease from the 3.6% growth recorded in the fourth quarter of 2022, indicating a slowdown in economic expansion for 2023.
According to OPEC’s Monthly Oil Market Report for August, Nigeria’s economic growth is expected to decelerate further in 2023. The report highlights that high inflation continues to be a significant challenge for the Nigerian economy. Inflation data for June showed an annual rate of 22.8% y-o-y, following previous rates of 22.4% y-o-y in May, 22.2% in April, and 22% in March.
The report attributes the rise in inflation to various factors, including conflict, the impact of climate change, population pressures, and below-average output in the agricultural sector, all of which have contributed to the scarcity of food resources over recent years.
To address these challenges, the Nigerian government has introduced a comprehensive financial package totaling N500 billion. Additionally, the Central Bank of Nigeria (CBN) raised the key policy rate by 25 basis points to 18.75% in July in an effort to curb inflation.
The report also highlights the economic impact of these challenges on Nigeria’s private sector. The Stanbic IBTC Bank Nigeria Purchasing Managers Index, which measures business activity and sentiment in the private sector, retracted to a level of 51.7 in July from 53.2 in June, reflecting a decline in economic activity.
Overall, the report suggests that Nigeria’s economy is facing a combination of internal and external challenges that are affecting its growth and stability. Efforts are being made by the government and financial institutions to address these issues and mitigate their impact on the economy.
