Nigeria’s Unemployment Rate: In the course of launching the 2023 outlook report, The Nigerian Economic Summit Group (NESG) has predicted that Nigeria’s unemployment rate will likely hit 37 percent in 2023.
According to the Nigerian Economic Summit Group (NESG) Outlook report titled “Nigeria in Transition: Recipes for Shared Prosperity”, it was revealed that the unemployment rate will increase to 37 percent and the poverty headcount will amplify to 45 percent due to weak performance in the job-elastic sectors, low labor absorption of sectors that will drive growth, and population growth estimated at 3.2 percent will lead to a decline in real per capita income.
Nigeria Population Growth to Unemployment Rate
According to the report, the nation’s population growth estimated at 3.2 percent will lead to a decline in real per capita income. This it states is due to weak performance in the job elastic sectors, and low labour absorption of sectors that will drive growth.
The report noted that the country’s real Gross Domestic Product (GDP) growth is also expected to moderate to 2.98 percent, as economic growth will be subdued in 2023 due to strains on investment and low productivity in critical sectors and gradually affecting the unemployment rate.
“The services sector will drive economic growth, but this growth will not be strong enough to generate significant jobs,” the report said. As a result, it said unemployment will remain unabated while economic growth will be supported by election-related spending and improvement in the oil sector.
Inflation Rate
The Nigerian Economic Summit Group (NESG) report further revealed that the country’s inflation rate will average 20.5 percent in 2023. Food price surges will remain the fundamental driver of inflation due to the enduring impact of flooding, increased production costs due to increased cost of credit, insecurity, and displacement.
Existing fuel shortages and the removal of fuel subsidies will continue to increase the core components, especially transportation. General Inflationary pressure is expected to remain elevated, driven by structural, cost, and monetary factors such as the Central Bank of Nigeria’s new cash policy.
Foreign Investment
The report noted that in 2023, foreign capital inflow will decline. The trade surplus will be sustained, albeit lower, the foreign reserve will depleted further, and exchange rate pressure will persist.
The report also stated that improvements in crude oil production will sustain Nigeria. CBN intervention in the FX market and shortage in FX inflow will culminate in a decline in foreign reserve to US$34.9 billion at the end of 2023. The decline in forex supply will further support exchange rate depreciation,” it said. Due to political risks and a negative yield on investment, investors will take a flight to safety in other emerging and developed economies.
Interest Rate
The report noted further that monetary policy tightening will continue, the lending rate will remain high, and investment will be constrained. According to the report, Nigeria’s sovereign risks are expected to remain a concern in 2023.
The budget underscores fiscal deficit expansion and the upward trajectory in public debt stock to N53.8 trillion. Fiscal sustainability is believed to remain an unemployment rate concern as government revenue will be eroded by personnel costs and high-interest payments on debt.
