IMF Staff Country Reports

The 2022 Article IV Consultation highlights that Nigeria’s economy has recouped the output losses sustained during the coronavirus disease 2019 pandemic supported by favorable oil prices and buoyant consumption activities. Gross domestic product adjusted for inflation has already reached its pre-crisis level and the third quarter of 2022 marked the eighth consecutive quarter of positive growth—despite continued challenges in the oil sector. Growth is estimated at 3 percent for 2022. Headline inflation declined in December 2022 for the first time in 11 months, but at 21.3 percent remains high—driven by elevated international food prices, large parallel market premiums and monetary policy accommodation. While the Central Bank of Nigeria raised the Monetary Policy rate (MPR) by a cumulative 500 basis points in 2022 and another 100 bps in January 2023, inflation remains above the MPR. The near-term outlook faces downside risks, while there are upside risks in the medium term. Higher international food and fertilizer prices and continued widening of the parallel market premium could culminate in the de-anchoring of inflation expectations. The oil sector faces downside risks from possible production and price volatility, while climate-related natural disasters (e.g., floods) pose the same risks to agricultural production.