The International Monetary Fund says it foresees Nigeria’s economy rebound to 0.8 percent in 2017, slightly higher than its earlier projections on prospects of higher oil production due to security improvements.
The fund also anticipates that oil prospects would help the troubled economy fully pick up to 2.3 percent in 2018.
In its January 2017 World Economic Outlook – “A Shifting Global Economic Landscape” just released Monday, the IMF now estimates Global growth for 2017-18 to accelerate at 3.4 percent and 3.6 percent, respectively as Economic activity in both advanced economies and emerging market and developing economies (EMDEs) accelerate.
But the 2016 is still put at 3.1 percent, in line with the October 2016 forecast.
Advanced economies are now projected to grow by 1.9 percent in 2017 and 2.0 percent in 2018, 0.1 and 0.2 percentage points more than in the October forecast, respectively. But the forecast is particularly uncertain in light of potential changes in the policy stance of the United States under the incoming administration.
The primary factor underlying the strengthening global outlook over 2017–18 is, however, the projected pickup in EMDEs’ growth.
“As discussed in the October WEO, this projection reflects to an important extent a gradual normalization of conditions in a number of large economies that are currently experiencing macroeconomic strains,” the fund stated.
EMDE growth is currently estimated at 4.1 percent in 2016, and is projected to reach 4.5 percent for 2017, around 0.1 percentage point weaker than the October forecast. A further pickup in growth to 4.8 percent is projected for 2018.
The IMF had projected in October that Nigeria’s overall economic growth prospect would remain subdued at -1.7 percent in 2016 on account of soft oil prices and a weak currency, but would pick up, albeit slowly to 0.6 percent in 2017.
“Nigeria’s forecasts were also revised up, primarily reflecting higher oil production due to security improvements,” the IMF stated as it observed oil prices increasing in recent weeks, reflecting an agreement among major producers to trim supply.
Nigeria’s economy slipped into recession following another contraction in Q2, 2016 as shocks associated with energy shortages and price hikes, scarcity of foreign exchange and depressed consumer demand, among others, apparently proved to be more damaging than expected.
The National Bureau of Statistics data showed domestic output in Q2, 2016 contracted by 2.06 percent, a decline of 1.70 percentage points in output from the -0.36 per cent recorded in Q1, and 4.41 percentage points lower than the 2.35 per cent growth in the corresponding period of 2015.
Nigeria’s GDP equally contracted by 2.24% in the third quarter of 2016, the fears the economy could be heading to a depression.
The Nigerian government authorities say their strategy is to spend the country out recession in the shortest possible time and have proposed some N7.28 trillion spending for the year, with about 30 percent of that going into capital which holds massive infrastructure that would create jobs.
The IMF is now advising low-income countries that have seen their fiscal buffers decrease over the last few years, to as a matter of priority, restore those buffers while continuing to spend efficiently on critical capital needs and social outlays, strengthen debt management, improve domestic revenue mobilization, and implement structural reforms—including in education—that pave the way for economic diversification and higher productivity.
For Countries like Nigeria which are hardest hit by the decline in commodity prices, the recent market firming provides some relief, but the adjustment to reestablish macroeconomic stability is urgent.
“This implies allowing the exchange rate to adjust in countries not relying on an exchange rate peg, tightening monetary policy where needed to tackle increases in inflation, and ensuring that needed fiscal consolidation is as growth- friendly as possible,” according to the WEO.
“The latter is particularly important in countries with pegs, where the exchange rate cannot act as a shock absorber. Over the longer term, countries highly dependent on one or a few commodity products should work to diversify their export bases.”
In its January 2017 World Economic Outlook – “A Shifting Global Economic Landscape” just released Monday, the IMF now estimates Global growth for 2017-18 to accelerate at 3.4 percent and 3.6 percent, respectively as Economic activity in both advanced economies and emerging market and developing economies (EMDEs) accelerate.
But the 2016 is still put at 3.1 percent, in line with the October 2016 forecast.
Advanced economies are now projected to grow by 1.9 percent in 2017 and 2.0 percent in 2018, 0.1 and 0.2 percentage points more than in the October forecast, respectively. But the forecast is particularly uncertain in light of potential changes in the policy stance of the United States under the incoming administration.
The primary factor underlying the strengthening global outlook over 2017–18 is, however, the projected pickup in EMDEs’ growth.
“As discussed in the October WEO, this projection reflects to an important extent a gradual normalization of conditions in a number of large economies that are currently experiencing macroeconomic strains,” the fund stated.
EMDE growth is currently estimated at 4.1 percent in 2016, and is projected to reach 4.5 percent for 2017, around 0.1 percentage point weaker than the October forecast. A further pickup in growth to 4.8 percent is projected for 2018.
The IMF had projected in October that Nigeria’s overall economic growth prospect would remain subdued at -1.7 percent in 2016 on account of soft oil prices and a weak currency, but would pick up, albeit slowly to 0.6 percent in 2017.
“Nigeria’s forecasts were also revised up, primarily reflecting higher oil production due to security improvements,” the IMF stated as it observed oil prices increasing in recent weeks, reflecting an agreement among major producers to trim supply.
Nigeria’s economy slipped into recession following another contraction in Q2, 2016 as shocks associated with energy shortages and price hikes, scarcity of foreign exchange and depressed consumer demand, among others, apparently proved to be more damaging than expected.
The National Bureau of Statistics data showed domestic output in Q2, 2016 contracted by 2.06 percent, a decline of 1.70 percentage points in output from the -0.36 per cent recorded in Q1, and 4.41 percentage points lower than the 2.35 per cent growth in the corresponding period of 2015.
Nigeria’s GDP equally contracted by 2.24% in the third quarter of 2016, the fears the economy could be heading to a depression.
The Nigerian government authorities say their strategy is to spend the country out recession in the shortest possible time and have proposed some N7.28 trillion spending for the year, with about 30 percent of that going into capital which holds massive infrastructure that would create jobs.
The IMF is now advising low-income countries that have seen their fiscal buffers decrease over the last few years, to as a matter of priority, restore those buffers while continuing to spend efficiently on critical capital needs and social outlays, strengthen debt management, improve domestic revenue mobilization, and implement structural reforms—including in education—that pave the way for economic diversification and higher productivity.
For Countries like Nigeria which are hardest hit by the decline in commodity prices, the recent market firming provides some relief, but the adjustment to reestablish macroeconomic stability is urgent.
“This implies allowing the exchange rate to adjust in countries not relying on an exchange rate peg, tightening monetary policy where needed to tackle increases in inflation, and ensuring that needed fiscal consolidation is as growth- friendly as possible,” according to the WEO.
“The latter is particularly important in countries with pegs, where the exchange rate cannot act as a shock absorber. Over the longer term, countries highly dependent on one or a few commodity products should work to diversify their export bases.”
