Nigeria’s unemployment rate projected to hit 37%

At Nigerian Economic Summit Group (NESG) has projected that the country’s unemployment rate will reach 37 percent by 2023.

The group in its Macroeconomic Outlook 2023 report titled “Nigeria in Transition: A Recipe for Shared Prosperity, said the country’s poverty rate will also increase to 45 percent.

According to the report, due to the weak performance in the elastic sector of work, and the low absorption of labor in the sectors that will lead to growth, the growth of the nation’s population of about 3.2 percent will lead to a decrease in real per capita income.

The report notes that the country’s GDP growth will also moderate to 2.98 percent, as economic growth will slow down in 2023 due to investment tensions and low productivity in critical sectors.

“The service sector will lead economic growth, but this growth will not be strong enough to generate significant jobs,” said the report.

As a result, he said unemployment will remain unabated while economic growth will be supported by election-related spending and improvements in the oil sector.

The report also states that the country’s inflation rate will average 20.5 percent in 2023.

“Inflationary pressures are expected to remain elevated, driven by structural, cost and monetary factors.

READ ALSO: Nigeria’s CBN maintains monetary policy rates despite recession

---

“Food inflation will remain the main cause of inflation due to the impact of ongoing floods, increased production costs due to increased credit costs, insecurity and displacement. Existing fuel shortages and the removal of fuel subsidies will continue to increase core components, especially transport, ” he said.

Investment

The report notes that in 2023, the flow of foreign capital will decrease. The trade surplus will remain, albeit lower, foreign reserves will decrease, and exchange rate pressure will remain.

“Due to political risks and negative returns on investment, investors will fly to safety in other developing and emerging economies.

“The increase in crude oil production will maintain the trade surplus. The intervention of the CBN in the FX market and the lack of FX inflows will lead to a decrease in foreign reserves to US$ 34.9 billion by the end of 2023. The decrease in forex supply will further support the depreciation of the exchange rate,” he said.

He also noted that monetary policy tightening will continue, debt levels will remain high, and investment will be limited. According to the report, Nigeria’s sovereign risk will remain a concern in 2023.

“The budget emphasizes the expansion of the fiscal deficit and the upward trajectory of the public debt stock to N53.8 trillion,” the report said.

“Fiscal sustainability will remain a concern as government revenue will be eroded by personnel costs and high interest payments on debt.

“While moderate crude oil prices and an increase in crude oil production are expected to support revenue, the increase in debt, especially external debt, due to the depreciation of the exchange rate will prevent the government from expanding capital project expenditures.”