The World Bank has stated that monetary policy tightening by the Central Bank of Nigeria (CBN) may not rein in inflation as anticipated by analysts. In its recent report titled ‘Global Economic Prospects’ on the outlook for 2024 and 2025, the World Bank pegged Nigeria’s economic growth rate at 3.3 per cent in 2024 same as its projection at the beginning of the year.
Furthermore, the bank projected Nigeria’s GDP to grow at 3.5 per cent in 2025. It explained that growth will pick up from the 2.9 per cent recorded in 2023 due to effect of the administration’s reforms in the petroleum and forex exchange sector.
However, the report noted that the failure of monetary policy tightening by CBN remains a risk to the outlook. CBN since this year has increased interest rates by a combined 750 basis points.
The report said: “After the macroeconomic reforms’ initial shock, conditions are expected to improve, resulting in sustained, but still-modest growth in non-oil economy. In addition, the oil sector is expected to stabilise as production recovers.”
“Risks to Nigeria’s growth outlook are substantial, including the possibility that the tightening of monetary policy stops short of reining in inflation.”
