IMF reverses forecast for Nigeria’s economy to 4.3% in 2020

The International Monetary Fund, IMF, Tuesday reversed Nigeria’s economy growth projection to -4.3 percent in 2020 from its earlier projection of -5.4 percent.

The Fund also projected that Nigeria’s economy would grow by 1.7 per cent in 2021 from its projected decline of -4.3 percent.

The Fund in June 2020 had projected that Nigeria’s economy would fall by -5.4 per cent by 2020 due to the coronavirus, COVID-19 pandemic.

Abebe Aemro Selassie, Director, African Department of the Fund had said : “On Nigeria, again, Nigeria is of course the oil exporting country, so the impact of the pandemic is again being compounded by the, you know, sharp decline in oil prices. We are projecting GDP growth to contract by around 5 percent, 5.4 percent if I remember correctly, in Nigeria this year. So very significant hit to incomes.”

The IMF in its latest Economic outlook released Tuesday also projected the world economy to fall by -4.4 percent in 2020, an upward guide from an earlier predicted rate of -4.9 per cent made in June, while it projected the world economy to grow by 5.2 per cent in 2021.

The IMF’s projection anticipates that social distancing due to the COVID-19 pandemic will continue into 2021, but the transmission of the virus will plunge globally by the end of 2022.

“We are projecting a somewhat less severe though still deep recession in 2020, relative to our June forecast,” the IMF’s Chief Economist, Gita Gopinath, said in the latest World Economic Outlook.

She added that the revision was driven by better-than-expected growth in advanced economies and China during the second quarter of the year and signs of a more rapid recovery in the third quarter.

In our latest World Economic Outlook released on Tuesday, Gopinath said: “We continue to project a deep recession in 2020. Global growth is projected to be -4.4 percent, an upward revision of 0.8 percentage points compared to our June update.

“This upgrade owes to somewhat less dire outcomes in the second quarter, as well as signs of a stronger recovery in the third quarter, offset partly by downgrades in some emerging and developing economies. In 2021 growth is projected to rebound to 5.2 percent, -0.2 percentage points below our June projection.”

The Fund said : “Except for China, where output is expected to exceed 2019 levels this year, output in both advanced economies and emerging market and developing economies is projected to remain below 2019 levels even next year. Countries that rely more on contact intensive services and oil exporters face weaker recoveries compared to manufacturing-led economies.

“The divergence in income prospects between advanced economies and emerging and developing economies (excluding China) triggered by this pandemic is projected to worsen.

“We are upgrading our forecast for advanced economies for 2020 to -5.8 percent, followed by a rebound in growth to 3.9 per cent in 2021. For emerging market and developing countries (excluding China) we have a downgrade with growth projected to be – 5.7 per cent in 2020 and then a recovery to 5 per cent in 2021.

“With this, the cumulative growth in per capita income for emerging-market and developing economies (excluding China) over 2020-21 is projected to be lower than that for advanced economies.”