Nigeria and South Africa, the economic powerhouses of Africa, are gearing up to face a challenging 2023, according to a recent report from BMI. In this business-focused analysis, we delve into the economic landscapes of these two nations.
Nigeria's Economic Outlook
According to teh report, economic growth in Nigeria is projected to slow to 2.0% in 2023, down from 3.3% in 2022.
The report noted that while the economy showed signs of improvement in Q2 2023, with a 2.5% year-on-year expansion, the oil sector continued to struggle, contracting by a staggering 13.4%.
Challenges such as crude production disruptions, theft, vandalism, and industrial actions persist. The agricultural sector also faced headwinds, growing by just 1.5% in Q2 2023 due to adverse climatic conditions and security concerns.
Further insights form the report revealed that President Bola Tinubu's economic reforms, including the partial cancellation of the fuel subsidy and exchange rate adjustments, are expected to impact domestic demand.
However, rapidly rising inflation, averaging 24.6% in 2023, threatens to erode real wages and increase poverty levels, potentially weakening private consumption.
The report notes that there is optimism for 2024, with a gradual decline in inflation expected to support economic growth, potentially reaching 2.9%.
South Africa's Economic Landscape
South Africa, too, faces economic hurdles in 2023. The report showed that despite Q2 2023 showing promise with a 3.6% growth in the non-oil sector, challenges persist in the oil economy, affecting overall performance. Crude production disruptions, theft, and vandalism continue to hamper progress.
President Cyril Ramaphosa's economic reforms and fiscal austerity measures are anticipated to create short-term economic headwinds. However, there's cautious optimism for South Africa's future, with economic growth projected to pick up in Q4 2023.
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