Nigeria’s crude oil production expected to surge, boost economic growth in 2024
By Kingsley Odii
A new report by FocusEconomics has projected that Nigeria’s crude oil production will reach a staggering 1.36 million barrels per day in 2024. FocusEconomics is a leading provider of macroeconomic intelligence, including forecasts for economic indicators and commodity prices.
This increase in oil output is expected to fuel the country’s economic growth and meet its growing fuel demands. The report reveals that improved security in the Niger Delta region has contributed to the rise in oil production, and this trend is expected to continue for the second consecutive year in 2024.
The report also highlights the significance of the Dangote Refinery, which is set to increase its production capacity. The boost in crude output will help address the scarcity of foreign currency reserves and rising inflation rates that Nigeria currently faces. However, the report does caution that the potential resurgence of conflict in the Niger Delta could pose a threat to this positive outlook.
In addition to the oil production forecast, the report addresses the challenges Nigeria is currently confronting. These challenges include a weakened national currency, the naira, and a shortage of foreign exchange reserves. Despite these obstacles, an acceleration in the country’s gross domestic product (GDP) growth is anticipated for 2024. This growth is expected to be driven by increased private expenditure and a surge in oil production.
However, the report cautions that persistently high-interest rates and soaring living costs could hinder this economic improvement. Nigeria’s inflation rate of 27.33% as of October 2023 is particularly concerning and requires careful monitoring. The report also expresses concerns about potential setbacks in economic reforms, especially in light of escalating social discord and incidents of crude oil theft in the Niger Delta.
While Nigeria’s economic momentum is expected to increase in the latter half of 2023, the report also notes a contraction in the private sector’s Purchasing Managers’ Index (PMI), suggesting a potential decline in industrial activity.
Fitch Ratings recently affirmed Nigeria’s economy with a ‘B-‘ rating and a stable outlook. However, concerns were raised regarding the persistent gap between official and parallel exchange rates and Nigeria’s vulnerability due to a weakened net foreign exchange reserve position.
The report also acknowledges the promising economic growth expected in other sub-Saharan African nations in 2024, driven by growing populations and significant investments in infrastructure projects. Nevertheless, the challenge of debt servicing remains a pressing issue for these economies.
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