Deloitte: West Africa’s economic growth rates to remain tepid in 2024
Deloitte forecasts Nigeria will likely experience tepid short-term growth due to ongoing macroeconomic headwinds. However, an increase in oil-refining output, driven by Dangote refinery may propel economic growth in the medium term. For Ghana, the outlook is favorable in the short to medium term. However, downside risks emanate from the forthcoming general elections in December, high inflation, and elevated interest rates weighing on private consumption and investment appetite this year. Damilola Akinbami, Chief Economist at Deloitte West Africa joins CNBC Africa to unpack the report.
Tue, 27 Aug 2024 11:31:48 GMT
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AI Generated Summary
- The short-term growth outlook for Nigeria remains tepid due to ongoing macroeconomic challenges like high inflation, currency volatilities, and government reforms impacting consumer spending.
- Ghana's short to medium-term outlook is favorable, with risks tied to the upcoming general elections, high inflation, and elevated interest rates affecting consumer spending and investment appetite.
- The cost of living crisis is expected to persist in both Nigeria and Ghana, with governments implementing reforms to address food shortages and alleviate the impact on consumers.
Deloitte, a global consulting giant, has recently released its forecast for the economic growth of two key West African nations - Nigeria and Ghana. According to Damilola Akinbami, Chief Economist at Deloitte West Africa, the outlook for Nigeria is expected to remain tepid in the short term due to ongoing macroeconomic headwinds. Factors such as high inflation, currency volatilities, and key government reforms have impacted consumer spending in Nigeria. While there was a slight decline in inflation in July, prices remain significantly elevated, affecting purchasing power and consumer spending. The currency issues, high interest rates, and insecurity concerns are also expected to continue to impact Nigeria's economy. On the other hand, Ghana's short to medium-term outlook is favorable, with downside risks stemming from the forthcoming general elections in December, high inflation, and elevated interest rates. Given the impending elections, investors are likely to adopt a 'wait and see' approach, which could impact consumer spending and investment appetite. Despite these challenges, Ghana has secured an IMF package and has seen steady declines in inflation, thanks to monetary tightening measures and market sentiment. Risks to inflation in Ghana include election-related fiscal spending and currency weaknesses. Looking ahead, the cost of living crisis is expected to persist in the short term in both Nigeria and Ghana. Governments in both countries have initiated reforms to address food crises, such as banning exports of key grains and suspending tariffs and duties on essential commodities. However, with only a few months left in the year, significant changes may take time to materialize due to the time lag between policy implementation and market impact. Policy uncertainty and election outcomes could also influence economic growth in the region. Overall, Deloitte predicts tepid growth for West Africa in 2024, with challenges and uncertainties characterizing the economic landscape of Nigeria and Ghana.
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