Why Nigeria's economy would suffer slow growth - KPMG

A leading financial services firm, KPMG, has reversed its 2023 earlier forecast of Nigeria’s economy.

In a report on Monday titled ‘Underwhelming Q2 2023 GDP Growth,’ KPMG said it adjusted its growth forecast for Nigeria to 2.65 per cent – from 2.85 per cent because of some factors in the Nigerian economy.

According to the new forecast, KPMG said it expects Nigeria’s economy to slow in 2023

The reasons KPMG listed, include low oil production, poor government investment in the economy, impact of subsidy removal and foreign exchange (FX) rates volatility among others.

Nigerian economy recorded a Gross Domestic Product growth of 2.51% (year-on-year) in real terms in the second quarter of 2023.

KPMG said it agreed in its report and stated: “Q2 2023 GDP results is broadly in line with our earlier downward revision of 2023 GDP to 2.85%. Nevertheless, we are adjusting our 2023 forecast further downwards to 2.65%,” KPMG said.

“Firstly, half year 2023 GDP currently stands at 2.41% and will require an average growth in H2 2023 of 3.30% and 3.50% to end the year at 2.85% and 3.0% respectively for 2023 which we believe is challenging and unlikely.

“Q2 2023 is however the quarter where the impact of Subsidy removal, FX unification and other reforms of the new administration had its major impact on squeezing household consumption demand and firms’ costs of operations as well as reduced private investment as firms continued to adopt a wait and see approach, tweak strategies to cope with rising costs and reduced demand for their goods and services and struggled to find FX to operate.”