Seven projections from CBN’s macroeconomic outlook

The Central Bank of Nigeria (CBN) has projected that Nigeria’s real sector output will grow by 3.38 percent in 2024, from 2.74 percent in 2023, due to increased investments in the oil and non-oil sectors.

According to its debut outlook entitled, ‘Macroeconomic Outlook: Price Discovery for Economic Stabilisation,’ the bank said the outlook for the Nigerian economy indicates broad resilience, with continued growth, expected inflation moderation, and greater exchange rate stability.

Here are seven other economic projections made by the CBN in its macroeconomic outlook.

Inflation

The apex bank projected that inflation will moderate to 21.40 percent by the end of the year within a range of 19.84 and 25.35 percent, from 28.92 percent in December 2023, putting a further rate hike in focus.

Nigeria’s annual inflation rate ticked up to 34.19 percent in June 2024 due to rising food prices, making it the fourth-highest inflation rate ever since 1996.

Olayemi Cardoso, Central Bank of Nigeria (CBN) governor, stated that the apex bank would extend its monetary policy tightening stance to tame persistent inflation.

“Core inflation is expected to moderate in 2024 due to sustained restrictive monetary policy stance. The recent adoption of the inflation-targeting lite framework will anchor inflation expectations in 2024, in addition to the favourable effect of moderating global inflationary pressures,” the report said.

Read also: Here’re 7 projections from CBN’s macroeconomic outlook

Capital Market

The CBN expects the capital market to remain bullish in 2024 off strong 2023 corporate returns. The yield curve is also expected to shift upwards and remain normal in 2024.

“Analysis of the market momentum, using the 125-day historical trend, shows that the actual All Share Index (ASI) is greater than the historical average, implying rising investor confidence in the capital market,” the report said.

External Reserves

According to the report, the external reserves will decline marginally in 2024 after repaying outstanding foreign exchange (FX), matured foreign exchange swaps, and debt service obligations.

“The expected improvement in crude oil earnings together with recent reforms in the foreign exchange market and energy sector, however, would cushion the drop in external reserves,” the report stated.

Exchange Rate

The CBN expects that improved investor confidence, higher remittances and a rise in crude oil export receipts will stabilise the exchange rate.

“The recent reforms in the foreign exchange market are expected to entrench efficiency and transparency, narrow the gap between the BDC and the NAFEM rates, and stabilise the exchange rate. The expected rise in crude oil export receipts would provide further impetus to the market, moderate depreciation pressures and strengthen the naira,” the report noted.

Balance of Payments

In 2024, total imports are expected to decline by 7.18 percent due to a drop in oil imports and the anticipation of operations in local refineries such as Dangote and Port Harcourt refineries.

However, exports are expected to rise by 1.24 percent to $55.21 billion in 2024, from $54.53 billion in 2023, “arising from the sustained growth in oil and non-oil exports.”

“The current account is projected to record a higher surplus of $6.96 billion in 2024 from $5.31 billion in 2023, driven by sustained trade surplus from robust export performance and increased diaspora remittances,” the report further said.

The External Sector

The external sector is expected to improve in 2024, driven by a favourable trade balance, increased domestic oil production, high crude oil prices, and the operationalisation of the Dangote and Port Harcourt refineries.

The Fiscal Sector

According to the report, the Federal Government revenue will grow by 134 percent to N19.6 trillion in 2024 from N8.4 trillion estimated for 2023.

Crude oil and gas sales/royalties and minerals and mining will account for 39.2 percent, while taxes will contribute 21.7 percent of the projected government revenue in 2024.

“The CBN decided to embark on the publication of Macroeconomic Outlook for the Nigerian Economy to anchor expectations and shape economic outturns,” the report said.