Nigeria’s economy, after a brief period of contraction, has shown signs of life. The Purchasing Managers’ Index (PMI), a key indicator of economic activity, surged to 51.0 index points in December 2024, signalling a return to growth. This marks a significant turnaround for the African giant, which had experienced two consecutive months of economic decline.
The news, released by the Central Bank of Nigeria (CBN), brought a sigh of relief to many. “The composite PMI for December 2024 at 51.0 index point, indicated expansion in economic activities after two consecutive months of contraction,” the CBN stated in its report.
This resurgence in economic activity is a testament to the resilience of the Nigerian economy. Businesses across various sectors, from manufacturing to agriculture, are regaining momentum, injecting renewed optimism into the market.
The industrial sector, a crucial engine of growth, played a pivotal role in this recovery. It climbed to 50.0 index points in December, indicating a return to growth after a period of contraction. This is particularly encouraging news, as a thriving manufacturing sector is essential for job creation and economic diversification.
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“21 subsectors reported growth in economic activities, with Forestry reporting the highest growth during the review month,” the apex bank noted. This highlights the diverse nature of the recovery, with sectors like forestry, driven by increasing demand for timber and other forestry products, leading the charge.
However, the recovery is not uniform. While 21 subsectors experienced growth, 15 others reported declines. The Nonmetallic Mineral Products sector, facing challenges due to weak demand for construction materials, particularly in regions grappling with infrastructure issues, recorded the most significant contraction.
This uneven performance underscores the need for a nuanced approach to economic policy. While the overall picture is positive, targeted interventions are crucial to address the specific challenges facing different sectors and ensure sustainable and inclusive growth.
The road to full recovery is still fraught with challenges. Persistent inflation, exchange rate volatility, and infrastructure deficits continue to cast a shadow over the economic outlook.
Despite these challenges, the resurgence of the Nigerian economy offers a glimmer of hope. It demonstrates the resilience of the Nigerian people and the potential for sustained growth. By addressing the remaining challenges and fostering a more conducive business environment, Nigeria can unlock its true economic potential and become a leading force in the African continent.
