The International Monetary Fund (IMF) has downgraded Nigeria’s growth forecast due to challenges such as low crude oil production and severe flooding impacting the country’s economy.

In its latest World Economic Outlook (WEO) report, the IMF lowered Nigeria’s growth projection for 2024 to 2.9%, down from the 3.3% predicted in its previous report.

The downgrade is primarily attributed to rising inflation, flooding, and setbacks in oil production.

Meanwhile, the IMF expects global economic growth in 2025 to remain steady at 3.2%, marking a slight 0.1% decline from its July 2024 forecast.

For Nigeria, the fund’s GDP growth projection for 2025 is revised upwards by 0.2% compared to its earlier estimates, while growth for 2024 remains at 2.9%.

The IMF also projects Nigeria’s inflation to stabilize at 25% in 2025, with a further decline to 14% by 2029.

“Nigeria’s economy in the first and second quarter of the year grew by 2.98% and 3.19% respectively amid a surge in inflation and further depreciation of the naira.

“The GDP growth rate in the first two quarters of 2024 surpassed the figure for 2023, representing resilience despite severe macroeconomic shocks with a spike in petrol prices and a 28-year high inflation rate.

“Nigeria’s inflation rate only began to slow down in July 2024 after 19 months of consistent increase dating back to January 2023.

“However, after two months of slowdown hiatus, inflation continued to rise on the back of an increase in petrol prices by the NNPCL in September,” the report said.

The IMF attributed its recent downgrade of Nigeria’s growth forecast to two key factors: disruptions in agriculture caused by severe flooding and issues related to security and maintenance that are hindering oil production.

Jean-Marc Natal, the Division Chief in the IMF’s Research Department, emphasized that these challenges were significant contributors to the revised outlook.

He stated, “Over the past year and a half, some progress has been seen in the region, with inflation stabilizing or even decreasing in some countries.

However, half of the countries are still far from reaching inflation targets, and a third continue to experience double-digit inflation. Growth remains uneven and too low, while debt service costs are still high in the region.”

In a separate briefing on the Global Financial Stability Report, Jason Wu, Assistant Director of the IMF’s Monetary and Capital Markets Department, highlighted that Nigeria’s economy is on a path toward stability, thanks to reforms introduced by the government.

The economic downgrade comes as certain Nigerian states, including Maiduguri, face severe flooding.

The World Bank has also reported a 13-month rise in inflation, driven by factors such as the removal of fuel subsidies, which increased transportation and production costs, and the depreciation of the naira against major currencies.

Data from the National Bureau of Statistics shows that inflation rose from 22.41% in May to 22.79% in June 2023, with a steady increase through the rest of the year, reaching 29.90% in January 2024. By mid-2024, inflation peaked at 34.19% before slightly decreasing to 32.70% by September.

Nigeria is also grappling with low crude oil production due to pipeline vandalism and crude oil theft.