NESG says Nigeria’s inflation highest in Africa, fourth globally in Dec 2024 — News — The Guardian Nigeria News – Nigeria and World News

Nigeria’s inflation rate was ranked highest in Africa and fourth globally in December 2024, reflecting deteriorating household living conditions and rising poverty, according to Nigeria Economic Summit Group (NESG).

  
After peaking at 34.2 per cent in June, Nigeria’s inflation rate briefly eased, but rebounded to 34.8 per cent in December 2024; driven by high food prices, elevated energy prices, high transportation costs and rising insecurity.
  
This is contained in NESG 2025 Macroeconomic Outlook Report released recently with the theme, ‘Stabilisation in Transition: Rethinking Reform Strategies for 2025 and Beyond’.  
  
According to the report, the short-term impact of these elevated levels of costs, among other factors, resulted in the economy experiencing a modest Gross Domestic Product (GDP) growth of 3.2 per cent in 2024 (Q1 to Q3), with real GDP growth remaining below 3.5 per cent since 2020.

This growth level, it said, is insufficient to enhance living standards or substantially reduce poverty. It went on to add that the country’s underwhelming economic performance was primarily attributed to its persisting structural issues, weakly diversified economic structure and productivity challenges across key sectors.
  
“According to the Federal Government’s National Poverty Reduction with Growth Strategy, the economy must achieve a growth rate of 4.4 per cent yearly. This target envisions 80 per cent of new jobs in self-employment and 20 per cent in wage-paying,” it revealed.
  
It noted that the agriculture and non-oil industrial sectors, which sustain a large portion of Nigeria’s population as source of employment, are struggling due to rising costs, insecurity and infrastructural limitations; with both sectors only accounting for 10.7 per cent of real GDP growth in the first three quarters of 2024, less than the contribution of just the oil and gas sector (12.2 per cent), in the same period.

   
However, the report also projected that inflation would drop to 24.7 per cent this year and that foreign exchange would stabilise at an average of N1,300/$1, driven by anticipated improvements in fiscal and monetary policy alignment. This expected strengthening of the naira is tied to a combination of favourable economic conditions, including higher crude oil sales, resurgence of oil refining and expanded agricultural production.
   
The report credits the anticipated reduction in inflation to better coordination between fiscal and monetary policies, saying that by aligning government spending with targeted monetary interventions, policymakers aim to curb the inflationary pressures that have plagued the economy in recent years.
  
It noted that key measures responsible for this projected improvement include disciplined government spending, strategic interventions in critical economic sectors and measures to mitigate the effects of global economic uncertainties on Nigeria’s domestic economy.
 
This will be a tough battle, it added, as a sectoral analysis shows that most critical sectors, apart from Information and Communication Technology (ICT), failed to achieve growth rates above four per cent as large employment-generating sectors such as agriculture,
manufacturing, trade, education and construction recorded growth rates below 2 per cent.
  
“In the first three quarters of 2024, largely reflecting the lingering effect of the petrol subsidy removal mid-2023, FX depreciation amid other structural challenges like power shortages and challenging business environment during the year, inflation surged unabated. On a positive note, the financial and insurance sectors recorded an impressive 30.3 per cent surge, while the ICT and oil & gas sectors posted growth of 5.3 per cent and 7.0 per cent.
 
“To maintain this momentum, the government must strengthen and deepen ongoing reforms to ensure these gains translate into sustainable growth and enhance productivity across key sectors of the economy,” the report reads.
 
Listing key lessons to shape future reform strategies, it said reforms and growth must be complementary; coordinated and consistent reform programmes; the need for public support; reforms must address equity concerns while being timely and inclusive.
 
“The proposed ideal macroeconomic stabilisation path must assume an annual average real GDP growth of above five per cent in 2025; a stable FX and stronger local currency; sustainable fiscal policies, pushing fiscal deficit below 3 per cent of GDP; reduced inflation and a robust external sector balance. A well-executed strategy will ease Nigeria’s journey into a diversified economy,” the report noted.On ways to achieve Economic Stabilisation in 2025, it listed controlling inflation; and to achieve that, better fiscal, monetary and trade policies.

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