The economic outlook of Nigeria and some other countries of the world appears clouded with high inflation which has reduced private sector optimism and weakened consumer spending.
According to a report by  the Organisation of Petroleum Exporting Countries (OPEC), this is in spite of the improvements in fossil fuel prices in the short term so indicated in the economic outlook.
OPEC indicated that this could increase uncertainty and make high debt levels to persist in Nigeria, and across some other countries of the world next year.
In its newly released Monthly Oil Market Report for July 2022, OPEC indicated that in May 2022, Nigeria’s composite Consumer Price Index rose to 17.7 per cent year-on-year, from 16.8 per cent year-on-year in the prior month.
Responding to the elevated inflationary pressures, the Central Bank of Nigeria (CBN) raised its policy rate by 150 bps to 13 per cent, bringing borrowing costs to the highest since April 2020.
“It was the biggest rate hike since July of 2016 amid concerns that persistent inflationary pressures could weigh on the country’s fragile recovery”, the report said.
Nigeria has been unable to increase its crude revenue despite the rise in crude prices, and consistent increases in production quota by OPEC.
The country’s output recently dropped to about 1 million barrels per day, further worsening its chances of taking advantage of the Russian/Ukraine war to earn more revenue.
OPEC’s forecasts put world GDP growth in 2023 at 3.2 per cent, with the assumption that the ramifications of the pandemic, geo-political developments in Eastern Europe and global financial tightening amid rising inflation do not negatively impact the 2023 growth dynamic to a major degree.
It also assumed that major economies revert back towards their growth potential. However, OPEC said the downside risk exists.
“Global inflation continues to be a major concern, along with the consequence of further monetary tightening measures by key central banks.
“The continuation of the pandemic into 2023 is another risk that could curb growth depending on the extent of measures taken to reduce contagion.
“While labour markets are forecast to remain tight, supply chain bottlenecks may not be resolved in the short term and high debt levels across the globe may persist”, the report said.
Although OPEC said the above-average fossil fuel prices support a firmly positive outlook for the rest of the year, however, it said “concerns over soaring inflation would increase uncertainty next year.
Brent International rose to $100.32 at 1:15PM last Wednesday after declining and closing at $99.22 per barrel on Tuesday. However, as at 12:52P on Thursday, prices slide back to $99 per barrel
The OPEC warning comes on the heels of a warning by the country’s Debt Management Office, that Nigeria needs to generate significantly more revenue beyond current levels to avoid debt distress.
A report said Nigeria lost a total of N4.2tn in crude oil revenue in the first six months of 2022 due to its inability to meet the daily production by OPEC.
While the country’s oil revenue is on a downward trajectory due to low production, its GDP grew by 3.11 per cent year-on-year in the first quarter of the year in real terms, following a 3.98% growth recorded in the previous quarter (Q4 2021).
Again, while the economy seems to be moving on a positive trajectory after the recession recorded in 2020, recent economic reality seems to be putting the recorded growth in jeopardy.
For instance, rising cost of goods and services in the country has forced organisations to reduce working hours, even as much as laying off staff due to surging operating costs.

Experts say policy actions to curb the rising inflation rate, triggered by the energy crisis, fuel scarcity amongst others need to be put in place, in order to avert what would seem as the third economic recession in just seven years.