In its latest Nigeria Economic Outlook, PricewaterhouseCoopers (PwC) has outlined seven key trends that are expected to shape the nation’s economic trajectory throughout 2024. The report, released on Thursday, projects positive growth driven by ongoing reforms, recovering oil production, and a proactive policy environment. However, it also highlights potential downside risks, including fiscal debt, interest rates, and inflation, among others.
According to the report, the main drivers of GDP growth in the last 12 months have been the financial services, information and communication, and utilities sectors. PwC anticipates these sectors will continue to propel growth in the short term, emphasizing the role of demand dynamics, investment, government reforms, and trade dynamics in influencing sectoral growth.
The report emphasizes the importance of achieving sustainable growth in 2024 by balancing ambitious fiscal reforms with effective budget implementation. PwC underscores the need to align fiscal and monetary policies to stabilize prices and meet target goals. Achieving budgeted oil revenue in 2024, as per the report, depends on factors such as OPEC oil production quotas, international oil prices, improved security in oil-producing regions, and geopolitical factors.
PwC acknowledges the potential of proposed fiscal reforms to boost non-oil revenue but stresses the importance of effective budgeting and execution for success. The report also identifies finding the right framework and instruments to achieve price stability as a key trend. Despite the Central Bank of Nigeria’s deployment of monetary policy tools, inflationary pressure has persisted. PwC suggests that the CBN must independently pursue inflation goals, emphasizing inflation control and maintaining a stable financial system.
The report highlights the challenge of unlocking productivity in the economy, citing limited fiscal space for public investment and difficulties in attracting private investments. Infrastructure funding may remain insufficient in 2024, falling short of benchmarks suggested by the World Bank and the National Integrated Infrastructure Master Plan.
PwC projects persisting vulnerability to external pressures with potential shocks, including geopolitical events, economic trends, environmental factors, political changes, and trade dynamics. The outcome of elections in various countries, particularly the USA, UK, and Taiwan, is expected to influence global trade and capital flows.
In terms of investor outlook, PwC predicts cautious optimism. Foreign portfolio investment flows to the capital market may remain cautious, influenced by challenges such as delays in capital repatriation. However, the report anticipates an improvement in foreign direct investment (FDI) flows driven by expansion in the ICT and manufacturing sectors.
While consumers are expected to adjust to evolving policy and macroeconomic realities, consumer spending may be pressured in 2024 due to rising prices of goods and services. PwC suggests that private consumption is expected to be marginally better than 2023, but poverty levels are projected to increase.
PwC’s Economic Outlook provides a comprehensive analysis of the factors shaping Nigeria’s economic landscape in 2024, emphasizing the need for strategic policy decisions, effective implementation, and resilience in the face of potential challenges.