How Is Nigeria’s Economy Looking In 2023?

As we look forward to what the year holds, we thought a great way to begin this year’s newsletter is looking at the economic forecast for Nigeria as predicted by the World Bank, which we believe will give you an insight into how you should invest your money this year. 

The World Bank’s most recent forecast suggests that Nigeria’s economy is projected to decelerate to 2.9 percent in 2023 and remain at that pace in 2024, barely above population growth. 

What is going on? 

According to the World Bank, the Nigerian economy is currently grappling with a significant energy and food costs increase. Diesel prices have surged by over 200% to reach over ₦800/litre between April and January this year. Additionally, the price of sliced bread (500g) has risen by 35% to ₦550 in December 2022 from ₦384 in September 2021. It is no surprise that the most recent inflation data puts Nigeria’s inflation rate at 21%. 

Why is economic growth going to deplete in 2023?

The outlook suggests that the economy might suffer in 2023, and one of the reasons is that production and security issues and volatile oil prices will hamper the recovery in oil output. Also, the non-oil sector is likely to be held back by the oil sector’s ongoing struggles.

Agriculture, the sector witnessing growth, is also expected to suffer from the aftermath of last year’s floods. And to top it all, the fiscal situation is expected to remain weak due to high borrowing costs and low energy prices. 

However, on the bright side, the World Bankhighlighted the need for Nigeria to address its structural challenges, such as improving its business environment, enhancing its electricity supply, and investing in human capital, to sustain its economic growth in the long term.

What does this mean for your investment? 

The economic outlook appears to be uncertain and challenging. As an investor, especially in Nigeria, the biggest enemy you might face in building wealth is the impact of inflation and currency devaluation. You are constantly racing against time to ensure that inflation does not eat up the wealth you’re trying to grow.

It is crucial to take quick action to protect your investments from the erosion of inflation. One effective strategy for safeguarding your wealth and growing its value over time is to manage your investments in USD.

Culled from RISEVEST.