By Adedapo Adesanya
The International Monetary Fund (IMF) in its latest forecast has downgraded expectations for the Nigerian economy for the 2020 fiscal year.
The Bretton Wood institution said in its reports that it expects Nigeria’s Gross Domestic Product (GDP) to shrink by 5.4 percent this year.
According to the global lender, this expected economic contraction is in light of recent challenges brought about by the coronavirus pandemic.
The fund had in April projected a 3.4 percent decline in Nigeria’s GDP, but an assessment of economic trends associated with the pandemic compelled it to review its earlier position.
The global financial institution said the economy will experience a recovery of 2.6 percent in 2021, a slight improvement compared to the 2.4 percent April projection for 2021.
In its presentation on Wednesday, following the release of the June 2020 World Economic Outlook, the IMF further disclosed that the global economy in 2020 and 2021 would further contract by 4.9 percent and 3 percent respectively.
The forecast represents a downgrade from its April projection of 3 percent contraction in 2020 and a recovery of 2.2 percent in 2021, adding that it will bring about a cumulative loss of total output for the global economy this year and next year to around $12 trillion.
It said, “Compared to our April World Economic Outlook forecast, we are now projecting a deeper recession in 2020 and a slower recovery in 2021.
“We are projecting a synchronised deep downturn in 2020 for both advanced economies and emerging markets and developing economies.
“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast.”
The pandemic has had more negative impact on activities in the first half of 2020 than anticipated and recovery is projected to be slower than previously forecast, the IMF said in the June 2020 Outlook.
“We are definitely not out of the woods,” Chief Economist and director of IMF’s research department, Ms Gita Gopinath said. “This is a crisis like no other and will have a recovery like no other.”
The IMF warned that the adverse impact on low-income households is particularly acute, setting back the significant progress made in reducing extreme poverty in the world since the 1990s.
The world is facing the worst downturn since the Great Depression, but the depth and duration of the economic collapse are not expected to be as severe, given the strength of the economy going into the crisis and the relative stability of the financial system.
However, as with earlier projections, there is a higher-than-usual degree of uncertainty around this forecast, the IMF said.
Across the world, countries are experiencing surges in new cases, complicating plans to reopen their economies. Even with some businesses resuming, voluntary social distancing and workplace safety standards are weighing on economic activity, the fund notes.
The global lender explained that any improvement moving forward will largely depend on the development of a vaccine or cure for the coronavirus disease or whether future waves create the need for additional lockdowns.
