Flashnotes Issue 14

Highlights

• Nigeria’s economy expanded by 2.74% in 2023, marking the second consecutive year of growth deceleration. This is coming on the heels of the impressive growth rebound recorded after the stimulation of the economy from the pandemic-induced downturn in 2020.
  
  
• The hypothesis of a normalisation mechanism driving growth to pre-pandemic level holds sway. But we argue that the growth deceleration recorded in 2023 was a consequence of the twin policies of fuel subsidy removal and exchange rate reforms.
  
  
• We anticipate that the knock-on effect of oil sector growth on non-oil sector activities will deliver greater economic growth for Nigeria in 2024. However, we expect that this growth could be limited to 3% by inflationary pressures fanned by Naira depreciation. In addition, aggressive monetary tightening by the CBN in response to inflationary pressures is also expected to weigh on growth in 2024.
  
  
• Furthermore, we expect growth to be further dampened by geopolitical tensions threatening to stoke up inflation and weigh on demand across the world. Particularly, the assaults on commercial vessels in the Red Sea by Houthi Rebels is expected to further destabilise international trade and adversely affect growth globally.

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