The International Monetary Fund (IMF) has foreseen a gradual decline in Nigeria's economic growth for 2023 and 2024, primarily influenced by security challenges in the oil sector. According to the IMF's World Economic Outlook Update released on Tuesday, growth in Sub-Saharan Africa as a whole is expected to decrease to 3.5 percent in 2023 before rebounding to 4.1 percent in 2024.

The IMF report highlights that Nigeria's growth prospects in the mentioned years align with its April projections, and the decline is attributed to security concerns surrounding the country's oil industry. Similarly, South Africa is expected to experience a growth decline of 0.3 percent in 2023, mainly due to power shortages. However, the forecast for South Africa has been revised upward by 0.2 percentage point since the April 2023 World Economic Outlook, reflecting resilience in services activity during the first quarter.

Amidst the outlook for Sub-Saharan Africa, the IMF also points out that global recovery is slowing, with widening divergences among economic sectors and regions. The global growth rate is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. Although the forecast for 2023 is slightly higher than the April 2023 World Economic Outlook predictions, it remains weak when compared to historical standards.

The report attributes the global slowdown to central bank policies aimed at combating inflation. The rise in central bank policy rates to address inflationary pressures is dampening economic activity. The IMF expects global headline inflation to decrease from 8.7 percent in 2022 to 6.8 percent in 2023 and further to 5.2 percent in 2024. However, underlying core inflation is anticipated to decline at a slower pace, leading to upward revisions in inflation forecasts for 2024.

The IMF's recommendation for most economies is to focus on achieving sustained disinflation while ensuring financial stability. Central banks are advised to prioritize restoring price stability and enhancing financial supervision and risk monitoring. Additionally, countries are urged to provide liquidity promptly while mitigating the potential for moral hazard. They should also build fiscal buffers with targeted support for the most vulnerable segments of the population.

The IMF further emphasizes that improvements in the supply side of economies will facilitate fiscal consolidation and lead to a smoother decline of inflation toward target levels. For advanced economies, the projected growth slowdown for 2023 is significant, decreasing from 2.7 percent in 2022 to 1.5 percent in 2023, with a slight 0.2 percentage point upward revision from the April 2023 World Economic Outlook.