Projected Stabilisation
Nigeria’s inflation rate is forecasted to stabilise at 14% by 2029, according to the International Monetary Fund (IMF). This projection offers a glimmer of hope amidst the current economic concerns, with inflation standing at 33.69% as of April 2024, a significant deviation from the IMF’s earlier prediction of 24.6% for the year.
Gradual Decline Expected
The IMF’s data indicates a gradual decline in inflation from 23% in 2025 to 16% in 2026, 15.4% in 2027, and finally reaching 14% in 2028 and 2029. This anticipated stabilisation is seen as a positive development for Nigeria’s economy, which has been battling rising inflation and interest rates.
Economic Challenges and Responses
Nigeria’s economy has faced substantial challenges recently, with soaring inflation and high-interest rates threatening economic growth. In response, the Central Bank of Nigeria has implemented various measures, including raising interest rates during the 295th MPC meeting in May 2024.
Concerns Over Monetary Policies
Economists, however, express concerns over the continuous rise in inflation and interest rates. Paul Alaje, Chief Economist at SPM Professionals, criticised the increase in the Monetary Policy Rate (MPR). He argues that relying solely on monetary tools is insufficient to address the underlying causes of inflation, such as food and transportation costs.
Alternative Solutions Suggested
Alaje stressed the need for a multifaceted approach beyond monetary policies. He pointed out that despite the Central Bank’s efforts, issues like the exchange rate remain problematic. Alaje believes that Nigeria’s economic solutions must extend beyond monetary adjustments to effectively tackle inflation.
Optimism for the Future
Contrastingly, economist Jonathan Thomas views the IMF’s prediction positively. He believes the stabilisation of the inflation rate by 2029 is a good sign for Nigeria’s economic future. However, Thomas emphasises the importance of addressing the root causes of inflation and maintaining vigilant economic policies to ensure sustainable growth.
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