The CFG Advisory, a financial consulting firm, has predicted a continuous expansion in Nigeria’s gross domestic product (GDP), putting the year end outlook at 3.25 percent on sustained policy formulation.
The Lagos-based financial services group disclosed this in its latest year end outlook entitled “The Reform Fatigue Quagmire”.
The report stated that though the GDP is expected to continue to rise, albeit marginally, “GDP growth of 3% is not sustainable for our population of 200 million. Nigeria requires 8-10% GDP growth for sustainability”.
This is as the National Bureau of Statistics (NBS) reported that the country’s GDP grew in real terms to 3.19 percent in the second quarter of 2024 from 2.98 percent in the previous quarter.
Nigeria’s economy is still in “stagflation”, according to the report, due to the ongoing reforms which aims to rein in runaway investment and ensure sustainable growth trajectory.
This is even as the country’s nominal GDP has seen significant decline in recent times, slipping from top to the fourth largest economy in Africa after South Africa, Egypt and Algeria.
According to the report, only three sectors of the economy experienced double digit growth in 2023 — Mining & Quarrying 26.16%, Water and Waste 11.93% and Financial Services 28.21%.
“Manufacturing was a paltry 1.45% reflecting the lack of productivity in the Nigerian Economy. Policy implementation to enhance productivity is critical to revive all the other sectors of the Nigerian economy for recovery from stagflation and sustainable growth,” the report stated.
The financial services firm said that in 2011 and 2014 the Nigerian GDP grew in excess of 8%, adding that in both years, inflation was within a band of 11 to 13% with a 12 to 15% interest rate.
“Our analysis and charts of the historical data, confirms that when inflation and interest rates are within this band, and real rates are positive, high GDP growth rates are assured. A pointer for Monetary Policy formulation,” it said.
The World Bank forecasts Nigeria to be the third most populous country in the world by 2050, with an annual population growth rate of 2.6% over the next ten years.
Analysts have however predicted that Nigeria may continue to suffer economic crisis if its GDP growth does not commensurate with its burgeoning population.
In its report, the CFG Advisory stated that the country’s “growth potential is limited by policy inconsistency, economic mismanagement and unchecked fiscal spending”.
Inflation to drop to 25.5%
The CFG Advisory report also revealed that Nigeria’s headline inflation is expected to decline to 25.50% up from 33.40% it stood in July, 2024.
Africa’s most populous nation has been contending with rising prices which has resulted in a cost of living crisis and sparked a nationwide protest.
The 28-year high consumer price, though dropped from 34.19% in June, marking its first decline in nearly two years, is still considered high when compared to 28.04% last July.
According to the financial reporting group, the key drivers of inflation has
been the sustained increase in food prices across the country, exacerbated by the removal of subsidy which has resulted in higher cost of petroleum products.
The electricity tariff adjustments and 75% increase in money supply to N100trn by Q2 2024 have equally stoked prices, adding to the woes of ordinary Nigerians.
The CFG Advisory however noted that Nigeria’s economy is on the right pedestal and may sustain its momentum provided that the government is more committed and sincere to implement its various policies to the latter.
“The fundamentals of the Nigerian Economy are sound. Poor economic leadership has failed to realize the potential and grow the economy,” it said.
“The success or failure of our projections, will depend on their commitment and sincerity to implement their well laid out policies. The goal is to drive the economy out of stagflation and meet the sustainable GDP growth target.”
