Panelists at FocusEconomics project Nigeria’s crude oil production to average 1.36 million barrels per day in 2024.
This is according to the December 2023 FocusEconomics Consensus Forecast report.
It is important to state that the figure projected is purely oil production-based and not condensate production.
In the report, it was stated that oil output is forecast to increase in 2024 for the second consecutive year on the back of increased security in the Niger Delta.
It stated further that higher crude output will translate into much-needed fuel supplies for the country as the Dangote Refinery ramps up production.
However, renewed turmoil in the Niger Delta remains a key downside risk to the outlook.
The December 2023 report also highlighted the multifaceted challenges facing Nigeria, including a scarcity of foreign currency reserves, escalating inflation rates, and a devalued national currency, the naira.
Despite these impediments, a projected acceleration in the country’s gross domestic product (GDP) growth for 2024 is anticipated.
This anticipated growth is predicated upon potential upswings in private expenditure and an envisaged surge in crude oil output.
However, the report elucidated that several factors stand poised to constrain this expected economic amelioration.
Notably, the persistently high-interest rates coupled with the soaring cost of living, evidenced by a daunting inflation rate of 27.33% as of October 2023, present formidable hurdles impeding significant improvement.
So, monitoring the strength of the naira, governmental fiscal policies, and fluctuations in fuel pricing are identified as pivotal considerations in the ensuing weeks.
The report noted apprehensions regarding potential regressions in the nation’s economic reforms, particularly amidst escalating social discord and incidents of crude oil theft in the Niger Delta, a region pivotal to Nigeria’s oil production.
These socio-economic challenges pose imminent risks to the country’s economic trajectory.
The report also suggested an uptick in Nigeria’s economic momentum throughout the latter half of 2023, propelled notably by amplified oil production and increased credit disbursement by financial institutions.
Regrettably, this upward trajectory did not translate uniformly, as evidenced by a contraction in the private sector Purchasing Managers’ Index (PMI), indicating a potential wane in industrial vitality.
The report also noted that Fitch Ratings recently affirmed Nigeria’s economy with a ‘B-‘ rating and a stable outlook.
While acknowledging substantial reforms in fuel subsidies and foreign exchange frameworks, Fitch noted concerns regarding the persistent disparity between official and parallel exchange rates, alongside Nigeria’s vulnerability stemming from a weakened net foreign exchange reserve position.
These factors collectively impede a more favorable rating assessment, despite acknowledging certain positive governmental strides.
It is also important to note that the report alluded to the prospect of heightened economic growth across other sub-Saharan African nations in 2024, due to growing populations and substantial investments in expansive infrastructure projects.
Nonetheless, the concomitant challenge of servicing debts remains a significant concern for sub-Saharan African economies.