By Milcah Tanimu
Professional services firm pwc nigeria has projected that nigeria’s inflation rate will decline to approximately 29.5% by the end of the year. This forecast exceeds the central bank of nigeria’s january projection of 21.4%.
In its latest economic outlook report titled “Navigating economic reforms,” pwc stated, “we project a marginal decline in inflation to 29.5% by year-end, balancing the effects of reforms, policy actions, external pressures, and food prices, particularly in the second half of the year.”
The report also anticipates that nigeria’s gross domestic product (gdp) may grow modestly by 2.9%, driven by sustained policy reforms. However, it notes that growth prospects may be constrained by significant economic pressures.
Regarding fiscal sustainability, the report expresses concern over the country’s elevated debt servicing costs, noting that 89% of the budgeted fiscal deficit is expected to be financed through new borrowings. As of the end of the first quarter, nigeria’s total public debt had risen to n121.67 trillion, an increase of n24.33 trillion (24.99%) in three months, according to the debt management office.
The report detailed, “nigeria’s total public debt stood at n121.67 trillion ($91.46 billion) as of march 31, 2024. The comparative figure for december 31, 2023, was n97.34 trillion ($108.23 billion). Total domestic debt was n65.65 trillion ($46.29 billion), while total external debt was n56.02 trillion ($42.12 billion).”
Pwc called on the government to prioritize macroeconomic stability by addressing security issues, social challenges, and inflation and exchange rate pressures. The firm recommended adopting scenario planning before implementing major economic reforms to prevent policy reversals, such as the recent cybersecurity levy.
For businesses, pwc analysts advised developing a strategic approach, stating, “revisit your strategy and be clear on your must-haves to win in the future, regardless of any economic scenario. Re-evaluate your entire cost structure to establish short, mid, and long-term actions to fundamentally adjust for the future.”