“Seven forecasts from CBN’s macroeconomic outlook”

The Central Bank of Nigeria (CBN) has forecasted that Nigeria’s real sector output will increase by 3.38 percent in 2024, up from 2.74 percent in 2023, driven by higher investments in both the oil and non-oil sectors.

In its inaugural outlook, titled ‘Macroeconomic Outlook: Price Discovery for Economic Stabilisation,’ the CBN noted that the Nigerian economy is expected to demonstrate broad resilience, with continued growth, anticipated moderation in inflation, and enhanced exchange rate stability.

Here are seven additional economic projections made by the CBN:

1. **Inflation**: The CBN projects that inflation will decrease to 21.40 percent by the end of 2024, within a range of 19.84 to 25.35 percent, down from 28.92 percent in December 2023. This projection underscores the possibility of a further rate hike. Nigeria’s annual inflation rate rose to 34.19 percent in June 2024, driven by increasing food prices, marking it as the fourth-highest inflation rate since 1996. CBN Governor Olayemi Cardoso indicated that the bank will continue its monetary policy tightening to control persistent inflation. The report also notes that core inflation is expected to ease in 2024 due to ongoing restrictive policies and the recent adoption of the inflation-targeting lite framework, alongside moderating global inflationary pressures.

2. **Capital Market**: The CBN anticipates that the capital market will remain bullish in 2024, buoyed by strong corporate returns from 2023. The yield curve is expected to shift upward and normalize in 2024. The report highlights that the All Share Index (ASI) is currently above its historical average, reflecting rising investor confidence.

3. **External Reserves**: The report projects a slight decline in external reserves in 2024 due to the repayment of outstanding foreign exchange (FX) obligations, including matured FX swaps and debt service commitments.

4. **Exchange Rate**: Improved investor confidence, higher remittances, and increased crude oil export receipts are expected to stabilize the exchange rate. Recent foreign exchange market reforms are anticipated to enhance efficiency and transparency, narrow the gap between the BDC and NAFEM rates, and stabilize the naira.

5. **Balance of Payments**: The CBN forecasts a 7.18 percent decline in total imports in 2024, attributed to reduced oil imports and the anticipated operations of local refineries such as Dangote and Port Harcourt refineries.

6. **Government Revenue**: Federal Government revenue is projected to grow by 134 percent, reaching N19.6 trillion in 2024, up from an estimated N8.4 trillion in 2023. Crude oil and gas sales/royalties and minerals and mining are expected to contribute 39.2 percent, while taxes will account for 21.7 percent of the projected revenue.

The CBN stated that the publication of the Macroeconomic Outlook aims to anchor expectations and influence economic outcomes.