In this half-year report, we review key issues shaping the global economy in H1 2023 in addition to providing a snapshot of notable regional issues confronting Africa in the same period with a view to understanding Nigeria’s external environment. We then dive into Nigeria’s local context with special focus on its growth performance, the twin reforms of fuel subsidy removal and exchange rate liberalization and their contribution to elevated inflation levels, external sector performance, and the performance of monetary and fiscal policy. We conclude the report by providing the outlook for H2 2023.
Global Economic Review
Inflation continues to lose steam In response to the continuous rate hikes and other monetary tightening strategies employed by major central banks across the world, inflation continued to ease through H1 2023 in advanced and emerging economies alike. From 9.06% in June 2022, its highest in four decades, US inflation eased to 2.96% in June 2023. Similarly, inflation in the Euro Area dropped from 10.62% in October 2022, which represents its all-time highest since its creation, to 5.52% by the end of Q2 2023. Similar trends of easing inflation were also observed in Canada, UK, China and India, bringing inflation closer to its pre-pandemic levels.