Adedapo Adesanya
By Adedapo Adesanya
Nigeria’s economy is expected to grow by 2.5 percent this year (2020) and the next (2021), according to the International Monetary Fund (IMF).
The projection was contained in the IMF’s January World Economic Outlook (WEO) titled Tentative Stabilization, Sluggish Recovery, signed by Ms Gita Gopinath, an Economic Counsellor and Director of the Research Department at the Fund, which was released on Monday and covers a two-year time period (2020-2021).
In an earlier report released last year October, there had been projection that the country’s real Gross Domestic Product (GDP) will grow by 2.3 percent in 2019 and 2.5 percent in 2020 as a result of recovery in oil prices and development in agriculture.
It also predicted that inflation is expected to rise in 2020 in the wake of the expected increase in the minimum wage and a higher VAT rate, regardless of the central bank’s effort to sustain a tight monetary policy.
The fund, however, gave a low projection in its growth forecast for the Sub-Saharan African region to 3.5 percent due to constrains and deteriorating public finance in South Africa.
“In sub-Saharan Africa, growth is expected to strengthen to 3.5 percent in 2020–21 (from 3.3 percent in 2019). The projection is 0.1 percentage point lower than in the October WEO for 2020 and 0.2 percentage point weaker for 2021.
“This 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),” the global lender said.
Also, the IMF gave a low projection to the global economy to 3.3 percent in 2020, representing a one percentage point decline from 3.4 percent forecast made in October last year.
“Global growth, estimated at 2.9 percent in 2019, is projected to increase to 3.3 percent in 2020 and inch up further to 3.4 percent in 2021. Compared to the October WEO forecast, the estimate for 2019 and the projection for 2020 represent 0.1 percentage point reductions for each year while that for 2021 is 0.2 percentage point lower.
“The global growth trajectory reflects a sharp decline followed by a return closer to historical norms for a group of under-performing and stressed emerging market and developing economies (including Brazil, India, Mexico, Russia, and Turkey).
“The growth profile also relies on relatively healthy emerging market economies maintaining their robust performance even as advanced economies and China continue to slow gradually toward their potential growth rates.
“The effects of substantial monetary easing across advanced and emerging market economies in 2019 are expected to continue working their way through the global economy in 2020. The global growth estimate for 2019 and projection for 2020 would have been 0.5 percentage point lower in each year without this monetary stimulus.”
“The global recovery is projected to be accompanied by a pickup in trade growth (albeit more modest than forecast in October), reflecting a recovery in domestic demand and investment in particular, as well as the fading of some temporary drags in the auto and tech sectors,” the international financial institution said on Monday.
With this projection, it is 0.4 percent higher than 2.1 percent projected by the World Bank for three years: 2020 – 2023 earlier in the year.
