IMF Raises Nigeria’s Growth Forecast To 2.5%
The International Monetary Fund has raised Nigeria’s growth forecast for 2021 to 2.5 per cent from 1.5 per cent earlier announced in January.
It disclosed this in its World Economic Outlook for April with the theme ‘Managing divergent recoveries’, which was released on Tuesday.
The report also projected a 16 per cent consumer price for the country in 2021.
While projecting an improved global growth, the IMF noted that it was one year since COVID-19 was declared a global pandemic.
However, it added, the outlook presented daunting challenges related to divergences in the speed of recovery both across and within countries and the potential for persistent economic damage from the crisis.
Part of the report read, “After an estimated contraction of –3.3 per cent in 2020, the global economy is projected to grow at six per cent in 2021, moderating to 4.4 per cent in 2022.
“The contraction for 2020 is 1.1 percentage points smaller than projected in the October 2020 World Economic Outlook, reflecting the higher-than-expected growth outturns in the second half of the year for most regions after lockdowns were eased and as economies adapted to new ways of working.
“The projections for 2021 and 2022 are 0.8 percentage point and 0.2 percentage point stronger than in the October 2020 WEO, reflecting additional fiscal support in a few large economies and the anticipated vaccine-powered recovery in the second half of the year.”
It added, “Global growth is expected to moderate to 3.3 per cent over the medium term – reflecting projected damage to supply potential and forces that predate the pandemic, including aging-related slower labour force growth in advanced economies and some emerging market economies.
“Thanks to unprecedented policy response, the COVID-19 recession is likely to leave smaller scars than the 2008 global financial crisis.
“However, emerging market economies and low-income developing countries have been hit harder and are expected to suffer more significant medium-term losses.”
On the impact of vaccines, the report said financial conditions in low-income countries generally did not respond as much as conditions in emerging markets did to monetary policy surprises by the Federal Reserve or ECB, or to news about US economic activity or COVID-19 vaccines.
It stated, “There are, however, some exceptions. First, positive vaccine news in 2020 lifted 10-year government bond yields, on average, in the five low-income countries with data series (Ghana, Kenya, Nigeria, Uganda, Vietnam).
“Second, positive ECB monetary policy surprises tend to lift six-month government bond yields, on average, in the three low-income countries with data (Nigeria, Rwanda, Zambia).