KPMG has estimated that Nigeria’s Gross Domestic Product will have a slow growth rate of 3% in 2023 due to challenges related to the redesign of the naira and the ongoing political transition.
This was in its report titled, ‘2023 Global Economic Outlook H1″ accessed by AMBusiness.
According to the report the global economic slowdown and its impacts on trade and financial flows are likely to have a negative impact on Nigeria’s GDP, which has been growing for eight consecutive quarters since emerging from the pandemic-induced recession in 2020.
In 2022, Nigeria’s GDP grew at an average rate of 3.10%, with a growth rate of 3.52% in Q4 2022 and 2.25% in Q3 2022, indicating a gradual improvement in economic performance.
Based on the report, the naira redesign policy implemented by the Central Bank of Nigeria in the last quarter of 2022 is expected to have an unfavorable impact on significant non-oil sectors, including manufacturing, trade, accommodation, and food services.
The KPMG’s report reads, “We expect Nigeria’s GDP to continue to grow at a relatively slow pace of 3% in 2023 due to the slowdown in economic activity that typically characterizes periods of political transition in Nigeria.
“Furthermore, the spillover from an expected slowdown in the global economy in 2023 and its trade and financial flows implications are expected to drag on GDP.
“Consequently, growth will be negatively affected by the Naira Redesign Policy introduced in Q4 2022 and Q1 2023 and its implications on key non-oil sectors like manufacturing, trade, accommodation and food services, transportation and other services, further slowing down overall GDP growth in 2023.”
The report also noted that yhe incoming government in May 2023 will encounter a difficult economic environment with slow growth, foreign exchange market challenges, insufficient government revenue to support expenditures, and high debt stock and debt service payments.
“A new government is set to take over from the current administration in May 2023. It will, however, face a deeply rooted challenging environment, characterised by fragile and slow economic growth and challenges in the foreign exchange market. Additionally, government revenue remains inadequate to support much-needed expenditure, leading to a high debt stock and high debt service payments,” it reads.
It was stated in the report that the oil sector shrank by 19.22% as a consequence of pipeline vandalism, oil theft, insufficient investment, and operational problems. These factors contributed to a decline in oil production from 2.07 million barrels to 1.0 million barrels.
In the remarks of the Global Head of Clients & Markets at KPMG International, Regina Mayor said, “The expression that has overwhelmingly dominated discussions, from boardrooms to political chambers and main streets, has been the cost-of-living crisis. The impact of such a lengthy period of uncertainty is being felt by everyone, and that’s reflected in KPMG’s latest Global Economic Outlook.”
