The International Monetary Fund (IMF) is expecting an over 7 percent growth in the Nigerian economy this year.

After reviewing West Africa’s biggest economy, the Washington-based Fund indicated that the country’s inflation will fall below 10 percent during the year.

“In 2013, growth is expected to recover to above 7 percent. Inflation is projected to decline below 10%, supported by the tight monetary policy stance and ongoing fiscal consolidation,” the IMF said on its website March 28, 2013.

The IMF team commended Nigerian authorities for prudent macroeconomic policies that have underpinned a strong economic performance in recent years.

It says “macroeconomic performance has been broadly positive over the past year. Real gross domestic product (GDP) growth is projected to have decelerated slightly to 6.3 percent, reflecting the effects of the nationwide strike in early 2012, floods in the fourth quarter of 2012, and continued security problems in the north.”

Nigeria Economy – Increase in Inflation

The IMF mentioned that the country’s annual inflation increased from 10.3 percent (end-of-period) in 2011 to 12.3% in 2012, owing mainly to the adjustment of administrative prices of fuel and electricity; large increases in import tariffs on rice and wheat; and the impact of floods in the third quarter of 2012.

It continued: “The external position has strengthened and international reserves rose from $32.6 billion at end-2011 to $44 billion at end-2012 (5½ months of prospective imports), driven by sustained high oil prices, stricter administration of the gasoline subsidy regime, and strong portfolio inflows.”

However, the key downside risks to the Nigerian economy, the IMF outlined, are a large drop in world oil prices; and slow progress in building consensus around key fiscal reforms.

Read the latest on the Nigerian economy at Ventures Africa.