Research Document: NESG H1 2024 Outlook Report

Posted Mon, Sep 2, 2024 7:15 AM

Despite a global economic stabilisation, primarily driven by improvements in developed economies, Nigeria's economic performance in H1-2024 exhibited a mixed picture. Recent reforms have significantly disrupted economic activities, contributing to a challenging business environment. This has resulted in the exit of multinational companies and the closure of over 200 local manufacturing firms within the past year.

In H1-2024, the economy experienced a 3.1 percent growth in real Gross Domestic Product (GDP), marking a slight increase compared to the previous half. While the economy benefited from improved trade positions, enhanced government revenue, and increased foreign investment, these gains have been tempered by heightened macroeconomic instability. Challenges such as exchange rate depreciation, intensified inflationary pressures, elevated interest rate environment, and deteriorated fiscal sustainability have persisted. Consequently, the positive aspects of economic growth have been overshadowed by increasing unemployment, declining per capita income, and a higher incidence of poverty, thereby undermining the social benefits of the economic expansion.

This report is structured into three distinct sections:

Section One provides a detailed but brief overview of the global economy and an analysis of the Nigerian economy for H1-2024, encompassing economic growth, inflation, fiscal and monetary policy environments, and conditions affecting investment and external trade.

Section Two addresses three pivotal issues essential for enhancing economic stabilisation in Nigeria. These issues include food security and its underlying drivers, energy challenges and factors impacting the country’s electricity supply, and the difficulties within the external trade and investment climates. Each of these areas is examined thoroughly due to their critical importance for the well-being of Nigeria’s economic stakeholders.

Section Three presents macroeconomic projections for H2-2024, covering key economic fundamentals such as growth, inflation, and trends in fiscal and monetary indicators. It also explores external sector indicators, including trade and investment positions, exchange rates, and external reserves. The section concludes with an assessment of both upside and downside risks to the macroeconomic outlook, considering economic, policy, and geopolitical factors from both global and domestic perspectives.