Nigeria flag Nigeria: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Africa’s leading economy, Nigeria - in close competition with South Africa - has a population of more than 219 million people (CIA). Worldwide, it is the 25th-largest economy by GDP volume. However, Nigeria's economy is highly dependent on oil and is therefore very vulnerable to fluctuations in crude oil prices and production. If over the past decade economic growth reached 2.5% on average, the Covid-19 pandemic and the fall in oil prices caused the economy to contract in 2020. Nevertheless, economic growth rebounded in 2021 (+3.6%) and 2022 (+3.2%) supported by a buoyant services sector and increased revenues from oil and gas exports. Crude oil production averaged 1.3 mbpd in 2022 and is expected to increase slightly to 1.4 mbpd in 2023, although the sector will continue to be affected by the combination of oil theft, pipeline vandalism, and ageing infrastructure. For 2023 and 2024, the IMF forecasts growth at 3% and 2.9%, respectively. Among the downside risks are high inflation and security issues.

Higher oil prices have brought an improvement in oil export receipts, resulting in a small surplus of the current account in 2022, from a deficit of 0.4% in 2021 (Fitch Ratings). Falling reserve levels (estimated at USD 36.3 billion in 2022, down from USD 40.2 billion one year earlier) have contributed to tight foreign-currency liquidity. The 2022 general government fiscal deficit was estimated at 6.1% of GDP by Fitch Ratings, as the subsidy on petrol cost the government approximately NGN 5 trillion (2.4% of GDP) in foregone revenue from the Nigerian National Petroleum Corporation (NNPC). Lower subsidy costs and a marginal improvement in oil production should contribute to a narrowing fiscal deficit in 2023 (still above 5%). Public debt increased from an estimated 36.6% GDP in 2021 to 37.4% GDP last year and is forecast to further rise to 38.6% GDP in 2023 and 39.8% GDP in 2024 (IMF). Even if the public debt remains low, debt accumulation has increased sharply, and interest payments absorb around 40% of the country’s scarce resources (Coface). According to Fitch Ratings, the government is expected to have to repay USD 2.4 billion in external debt in 2023 and USD 2.7 billion in 2024. To meet these payments, the government will likely rely on a mix of drawing down reserves and obtaining new external borrowing, most likely through syndicated loans. Fuelled by elevated food prices, high domestic energy prices, accommodative monetary policy and import restrictions, the inflation rate has constantly exceeded the Central Bank’s inflation target range of 6% over the past few years and reached a 17-year high in 2022, at 18.9%. Over the course of the year, the monetary policy rate was increased three times by a total of 450 basis points by the CBN, and the cash reserve ratio was utilized to periodically eliminate liquidity from the domestic banking sector. Nevertheless, inflation is expected to remain high over the forecast horizon, at 17.3% this year and 12.6% in 2024, according to the IMF.
Fiscal consolidation, economic diversification, inclusive growth and security issues are the main priorities. The main obstacles to development in Nigeria are the inappropriate energy supply, deficient transport infrastructures, inefficient judiciary system, widespread corruption, together with high inflation. The gap between the official value of the naira and its value on the black market is substantial and the banking system is fragilized by the deteriorating quality of assets.

Despite the country's dynamism, the real challenge for Nigeria is the risk of a demographic explosion: according to the United Nations, the population of Nigeria could reach 730 million inhabitants in 2100. Concerns regarding this potential boom are exacerbated by the fact that half of the inhabitants live below the poverty line; pandemics are rampant (HIV, tuberculosis), infant mortality is high and the country struggles with significant levels of inequalities. According to the Nigerian Bureau of Statistics, unemployment stood at 33.3% in 2022 (42.5% for youth), and 22.8% of the active workforce is under-employed. In 2021, Nigeria returned to positive real GDP per capita growth after five years of negative per capita growth. The overall GDP per capita was estimated at USD 5,884 in 2022 by the IMF.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 477.38390.00394.94458.00524.05
GDP (Constant Prices, Annual % Change) 3.32.93.13.13.1
GDP per Capita (USD) 2,2021,7551,7341,9632,192
General Government Gross Debt (in % of GDP) 39.638.841.340.340.1
Inflation Rate (%) n/a25.123.014.714.5
Unemployment Rate (% of the Labour Force) 0.00.00.00.00.0
Current Account (billions USD) 1.022.822.351.460.92
Current Account (in % of GDP) 0.20.70.60.30.2

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Nigerian Naira (NGN) - Average Annual Exchange Rate For 1 GHS 63.5370.1766.7562.5063.77

Source: World Bank, 2015

 

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Latest Update: December 2023