The International Monetary Fund (IMF) has revised upward its Nigeria’s 2021 Gross Domestic Product (GDP) growth forecast to 2.5 per cent from the 1.5 per cent it projected in January this year, the fund said in its latest World Economic Outlook (WEO) released yesterday.
The Bretton Woods institution also revised its growth forecast for the country next year, upwards to 2.3 per cent from 2.1 per cent it predicted in January. Nigeria’s economy, the IMF further said, is now likely to suffer a 1.8 per cent contraction this year as against the 3.2 per cent contraction, it forecast in January.
On Monday, the Chief Consultant, B. Adedipe Associates Limited, Dr. Biodun Adedipe, while appearing on a Channels TV programme, had said that it expected the country’s economy to grow by 2.54 per cent this year.
According to him, the IMF, the World Bank and other international organisations’ forecasts on Nigeria’s economy are usually not accurate because of the country’s large informal sector.
The respected economist said that for the country to experience accelerated economic growth, the government should introduce a stimulus programme that is deliberately targeted at the large number of Nigerians that are at the bottom of the pyramid, adding that more attention should be given to the micro-finance bank (MFB) sub-sector. Although the IMF noted in its report that COVID-19 continued to exact a large toll on sub-Saharan Africa, especially, for example, Ghana, Kenya, Nigeria, South Africa, it predicted that having suffered its largest contraction ever (–1.9 per cent in 2020), growth in the region is expected to “rebound to 3.4 per cent in 2021, significantly lower than the trend anticipated before the pandemic.”
The figure is 0.2 per cent, higher than the 3.2 per cent growth it projected for the region in January.
Citing the rollout of COVID-19 vaccine and the massive amount (estimated at $16 trillion) that governments injected into their economies to mitigate the impact of the pandemic, which it said would accelerate global economic growth, the IMF also raised its global economic growth forecast for 2021 to six per cent, up from the 5.5 per cent growth it projected in January.
Analysts note that the IMF forecast, if realised, would mark the fastest pace of global growth since 1976.
The fund also said the world economy contracted 3.3 per cent in 2020, a modest upgrade from an estimated contraction of 3.5 per cent in its January update. It, however, projects that international economic growth will slow to 4.4 per cent in 2022, up from its January forecast of 4.2 per cent. In a statement, the IMF said:
“Global prospects remain highly uncertain one year into the pandemic. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic-induced disruptions and the extent of policy support.
“The outlook depends not just on the outcome of the battle between the virus and vaccines—it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis. “Global growth is projected at six percent in 2021, moderating to 4.4 per cent in 2022.
The projections for 2021 and 2022 are stronger than in the October 2020 WEO. The upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility.
“High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalisation, and the evolution of financial conditions.”
The latest WEO – released at the start of the IMF’s and World Bank’s Spring Meetings – shows a divergence between the outlook for the United States and much of the rest of the world. According to the report, the United States’ economy this year will join China in achieving a level of GDP growth that exceeds where it stood before the pandemic struck.
“(M)ultispeed recoveries are under way in all regions and across income groups, linked to stark differences in the pace of vaccine rollout, the extent of economic policy support, and structural factors such as reliance on tourism,” the IMF said in its report summary.