Economic analysts forecast that Nigeria’s growth rate will exceed the 3.46% reported in Q3 2024 as the country awaits the release of the Q4 2024 GDP report.
Notwithstanding this projected improvement, the full-year GDP growth rate is predicted to decline below the Q3 figure.
In the budget year 2024, the federal government set a target GDP growth of 3.75%. The growth rate that the government has set for the entire year 2024 is higher than what economists anticipate it to be.
Notably, since the current GDP rebasing project is scheduled to begin in 2025, it will not affect the GDP value for 2024.
Expert Opinions
Industry analysts who were interviewed offered the following predictions on GDP performance.
Investment advisor Onyinyechi Onwubu of FCSL Asset Management anticipates that the GDP for Q4 2024 will surpass the 3.46% recorded by the National Bureau of Statistics (NBS) for Q3 2024. In the latter part of the year, we anticipate heightened commercial activity during the holiday season, propelling the Q4 2024 GDP to range between 3.5% and 3.6%. However, the average GDP growth rate for 2024 is anticipated to be less than this.
According to Moyosore Onanuga, Head of Investments at AIICO, Nigeria’s GDP is expected to grow by 2.5% to 3.5% in Q4 2024, mainly due to a trade surplus and higher demand during the holiday season. According to the National Bureau of Statistics, GDP expanded by 3.46% year over year in Q3 2024, outpacing the 2.54% growth rate in Q3 2023 and the 3.19% growth rate in Q2 2024. With a 53.58% GDP contribution, the services sector continued to be the key engine of growth, with sectors like banking, consulting, law, and FinTech all playing important roles.
Additionally, GDP is anticipated to be rebased, which would probably impact future projections. We anticipate that the fundamentals will remain unchanged, though, as the rebasing has little effect on economic activity. It better depicts the financial activities currently taking place in the nation.
Reasons for Expecting Q4 Growth to Exceed Q3 2024
It is anticipated that several variables will propel Q4 2024 GDP growth above the Q3 level:
- Festive season boost: The fourth quarter of the year’s festive season typically boosts economic activity due to increased consumer spending on apparel, food, entertainment, energy use, and leisure activities.
- Trade surplus: Nigeria’s Q3 2024 foreign trade surplus was N5.81 trillion, and a sustained favorable trade balance in Q4 is anticipated to support GDP growth directly.
- Excellent performance of the services industry: The services sector, which includes banking, FinTech, telecommunications, and legal services, accounts for more than half of GDP and will continue to be a major source of expansion.
Reforms and progressive policies that promote economic growth
To stabilise the economy and encourage economic growth, the federal government has a set of monetary and fiscal policy reforms on the table:
Reforms in the oil sector
- The Nigerian National Petroleum Corporation (NNPC) reorganized and became a commercial organization to increase productivity and revenue.
- Hydrocarbon Tax (HT), Company Income Tax (CIT) for petroleum businesses, and updated royalty rates are some of the reforms.
- The refineries in Port Harcourt, Warri, and Kaduna are being renovated to stabilise domestic oil prices and lessen reliance on imports.
Measures to increase revenue
- The government has raised taxes, including a 25% personal income tax on people making N100 million or more per month and a 7.5% VAT hike to 10%.
- To increase tax collection and income production, a digitalised tax system is being implemented.
Changes to monetary policy
- The government is enacting bank recapitalization measures and updated rules for international money transfer operators (IMTOs) and Bureau de Change (BDCs) in an effort to stabilize the currency rate.
- A hawkish monetary policy approach has been adopted to reduce inflation, increase market confidence, and stabilize prices.
