The Organisation of the Petroleum Exporting Countries (OPEC) applauded Nigeria’s economic performance in the third quarter of 2023, stating that it “exceeded expectations.” The report attributes this growth to robust activities in the non-oil sectors, particularly in services and agriculture.
According to OPEC, Nigeria’s economy recorded a significant year-over-year increase of 3.1% in the third quarter of the previous year. This surpassed the 2.6% year-over-year growth in Q2 2023 and the 2.4% year-over-year growth in Q1. Despite this positive development, the organization expressed apprehension about the rising inflationary pressures within the country.
OPEC maintained that Nigeria’s inflation rate climbed to 27.3% in October, highlighting a growing concern. The report attributes this acceleration to the removal of petrol subsidies and the devaluation of the naira. The removal of subsidies and currency devaluation are cited as major contributors to persistent second-round effects, impacting the overall inflation landscape.
The report states, “There are concerns about inflationary pressures in Nigeria, with the inflation rate reaching 27.3% year-over-year (in October). This acceleration is largely attributed to persistent second-round effects following the removal of petrol subsidies and the devaluation of the naira.”
Comparing recent months, the report notes that the current inflation rate compares to 26.7% year-over-year in September and 25.8% in August. Additionally, the annual core inflation rate, excluding farm produce, rose to 22.7% year-over-year in October, compared to 22.1% in September and 21.5% in August.
Moreover, OPEC highlighted that the Purchasing Managers Index (PMI) experienced a drop, possibly signaling a challenging economic situation ahead. The decline in PMI often indicates a contraction in economic activity, raising concerns about the potential hurdles that lie ahead for Nigeria’s economy.
As Nigeria continues to navigate its economic landscape, OPEC’s report underscores the need for careful monitoring and strategic measures to address inflationary pressures, ensuring sustained and balanced economic growth.
