As we take strides into each year, predicting economic trends is important to enable us make informed decisions. As is usual practice, economists and economic thought leaders have provided their forecasts regarding the anticipated developments in the nation’s economy, shedding some light on the anticipated macroeconomic environment, offering insights into key indicators such as GDP growth, inflation, monetary policy rate, and exchange rates. Additionally, they provide a comprehensive outlook on the capital market, focusing on the equity and fixed-income markets. In this article, we summarize experts’ economic projections for Nigeria in the year 2024. Additionally, we will look into the fiscal landscape, the role of the services sector, and changes in consumer behavior for 2024.
Overall Macroeconomic Environment
1. Economic Growth: The overall economy is expected to do a bit better in 2024, growing by around 2.9%. This is thanks to more oil being produced, the government spending more money, and people getting used to changes in how fuel is priced. Some areas, like finance and communication, will be doing well, but things might be tougher for manufacturing and agriculture.
2. Prices Going Up (Inflation): You might notice that things are getting more expensive. Inflation, or the rise in prices, is predicted to be about 27.9% on average in 2024. This happens because of problems like insecurity and difficulties in moving goods around. But there’s hope that in the second half of the year, prices might start going down as the government takes steps to fix these issues.
3. Fiscal Landscape: Nigeria’s piggy bank, or the fiscal deficit, is expected to shrink a bit in 2024. Picture it like this: the government plans to spend a bit less than it did in 2023 compared to what the country earns. It’s like managing your monthly budget. The government expects to get more money from selling oil, taxes, and trade gains. Removing the fuel subsidy also frees up some money for paying off debts. However, there’s a challenge – the government aims to make ₦18.3 trillion, which is quite a bit more than what it earned in 2023. This can be tricky, especially if oil production and prices don’t go as planned.
4. Interest Rates and Borrowing: Expect the cost of borrowing money to go up a bit in the first half of 2024. The government is planning to borrow quite a bit to cover its spending, and this might make it a bit more expensive for everyone to borrow money. But don’t worry too much; it’s not expected to go too high, and it might come down a bit later in the year.
5. Foreign Money and Exchange Rates: The value of our money compared to other countries’ money might stay under a bit pressure. More people want to buy things from other countries, and the money we get from selling our oil might not be enough. Experts’ projections are that, on average, one US dollar will be worth about N925 in 2024.
6. Services Sector: Think of the services sector as the engine powering Nigeria’s growth. It includes things like telecoms and financial services, which are becoming more and more important. Imagine it as the part of the economy that keeps growing and creating jobs. This sector makes up more than half of everything the country produces, and it’s expected to keep doing well.
1. Stock Market (Equity): Investing in Nigerian companies might be a bit tricky. Even though the stock market looked like a good deal at the end of 2023, there’s some caution now. Investors might become a bit hesitant depending on how well companies perform. But if things in the world economy and money markets improve, more foreign investors might be interested in Nigerian companies.
2. Savings and Investments: Saving money in short-term investments might give you a bit more return, especially in the first half of the year. However, be aware that the government plans to borrow a lot of money, which could affect how much interest you get. It might be a good idea to keep an eye on this.
3. Government Bonds: The government is likely to borrow money by selling bonds to investors. This could mean that there might be more bonds available than people want to buy, and this might push up the interest rates on those bonds. So, if you’re thinking about investing in government bonds, you might want to be careful.
Consumers might feel a bit of a squeeze on their wallets. Prices of things might go up more than usual (around 30% on average), making consumers more careful about how they spend. This might lead to changes in how they shop – maybe choosing smaller sizes or looking for better deals. The middle-income group might feel this pinch more, pushing people towards two extremes – either buying cheaper things or treating themselves to a bit less.
Consumer Trends to Watch:
- People will become more careful with their money, focusing on balancing their budget, in order to make room for other costs.
- Look out for smaller-sized products becoming more popular.
- You might see people making more trips to stores but buying fewer things each time.
- People might start choosing cheaper brands or products.
- Expect more trips to neighborhood stores for convenience.
- Sales and promotions will be a big hit, as everyone looks for the best deals.
In a nutshell, the year 2024 looks like it’s going to be a mixed bag for Nigeria. There’s some growth, but it comes with challenges like rising prices and changes in interest rates. The government plans to spend wisely, and the growing services sector is like the reliable engine keeping things moving. Consumers also need to be a bit smarter with money, adjusting habits to make the most of what they have.
Ensure to keep an eye on how things unfold, and don’t hesitate to check for updates as the year goes on. For more on the economic projections for 2024, click here to view the full report.