IMF, World Bank Differ On Nigeria’s Growth Forecast
Contrary to the 2.1 per cent growth projected by the World Bank in the Nigerian economy, the International Monetary Fund (IMF) on Monday projected 2.5 per cent growth for it.
The IMF projection, as contained in its January Global Economic Outlook, released yesterday, covers two-year growth target.
The IMF prediction is 0.4 per cent higher than 2.1 per cent projected by the World Bank for three years: 2020 – 2023.
The World Bank report was captured in its January Global Economic Prospects released on January 8.
It, however, described the country’s macroeconomic framework as not “conducive to confidence”, adding that the macroeconomic framework is characterised by multiple exchange rates, foreign exchange restrictions and persistent inflation.
In the report titled: “Tentative stabilisation, sluggish recovery”, signed by Gita Gopinath, an Economic Counsellor and Director of the Research Department at the Fund, the IMF said the Nigerian economy will grow at 2.5 per cent this year and the next.
According to the Fund, the economy grew 1.9 per cent in 2018 and 2.3 per cent last year.
The IMF report said in sub-Saharan Africa, growth is expected to strengthen to 3.5 percent in 2020 to 2021 from 3.3 per cent last year.
The projection is 0.1 percentage point lower than in the October World Economic Outlook for 2020 and 0.2 percentage point weaker for 2021.
“This”, the Fund said, “reflects downward revisions for South Africa (where structural constraints and deteriorating public finances are holding back business confidence and private investment) and for Ethiopia where public sector consolidation, needed to contain debt vulnerabilities, is expected to weigh on growth.”
It said global growth is projected to rise from an estimated 2.9 per cent last year to 3.3 per cent in 2020 and 3.4 per cent for 2021— a downward revision of 0.1 percentage point for last year and 2020 and 0.2 for 2021.
According to the IMF, low interest rates and reduced trade tensions will likely buoy the global economy over the next two years and help nurture steady if modest growth.
The IMF said emerging market economies in macroeconomic distress related to domestic imbalances will need to continue making the policy adjustments necessary for rebuilding confidence and putting in place the conditions for a return to stable and sustainable growth.
The report said: “In these contexts, ensuring adequate safety nets to protect the vulnerable remains critical within overall existing constraints. High-debt economies should generally aim for consolidation — calibrating its pace to avoid a sharp slowdown in activity — by improving subsidy targeting, broadening the revenue base, and ensuring stronger compliance.”
The Fund said monetary policy should remain accommodative where inflation is still muted. With interest rates expected to remain low for long, macro-prudential tools should be proactively used to prevent the build-up of financial risks.
It further said: “Given historically low interest rates alongside weak productivity growth, countries with fiscal space should invest in human capital and climate-friendly infrastructure to raise potential output.
“Economies with unsustainable debt levels will need to consolidate, including through effective revenue mobilisation.
“To ensure a timely fiscal response if growth were to slow sharply, countries should prepare contingent measures in advance and enhance automatic stabilisers.”
The Fund said a coordinated fiscal response may be needed to improve the effectiveness of individual measures.
“Across all economies, a key imperative is to undertake structural reforms, enhance inclusiveness, and ensure that safety nets protect the vulnerable,” it said.
It advised countries need to cooperate on multiple fronts to lift growth and spread prosperity.
The Fund further said: “They need to reverse protectionist trade barriers and resolve the impasse over the World Trade Organisation’s appellate court.
“They must adopt strategies to limit the rise in global temperatures and the severe consequences of weather-related natural disasters.
“A new international taxation regime is needed to adapt to the growing digital economy and to curtail tax avoidance and evasion, while ensuring that all countries receive their fair share of tax revenue.”
It insisted that while there are signs of stabilisation, the global outlook remains sluggish and there are no clear signs of a turning point.
“There is simply no room for complacency, and the world needs stronger multilateral cooperation and national-level policies to support a sustained recovery that benefits all,” it added.