IMF projects 1.9% growth for Nigeria in 2018, country leads Africa

Fund says global economic upswing creates a window of opportunity

The International Monetary Fund (IMF) has forecast a 1.9 per cent growth for Nigeria by 2018 and a moderate 0.8 per cent growth at the end of this year to retain economic lead in the continent.

Growth projections are lifted by diversification activities, especially in agriculture and a boost in global oil prices, and in particular for Nigeria where output peaked at 1.8 million barrels at July end, and still exempted from the OPEC output cut until 2018.

However, these projections fall below the Fund’s estimates for sub-Sahara Africa put at 3.4 per cent and 2.6 per cent for 2019 and year-end respectively. Nigeria’s growth projections are nonetheless above those for South Africa estimated at 1.1 per cent and 0.7 per cent for 2019, and end 2018 respectively.

The IMF, in its World Economic Outlook (WEO) for October 2017 released in Washington DC, noted that “the global recovery is continuing, and at a faster pace,” and therefore the Outlook “upgraded its global growth projections to 3.6 per cent this year, and 3.7 per cent for next…”

Nigeria recently exited from its worst recession in decades with a moderate 0.55 per cent growth in gross domestic product (GDP), amid projection of at least one per cent growth.

Although the country’s consumer price index (CPI), which measures the rate of inflation dropped to 16.05 per cent at July end, but the food index increased by 20.28 per cent, the highest level since 2009, mostly on account of the exchange rate thereby spiking food prices.

The Fund noted that the global pick-up in activity which started in 2016, which was the weakest on account of the global financial crisis, gained further momentum in the first half of 2017, adding that “… the sub-Saharan Africa show signs of improvement.”

It further said that growth prospects for emerging and developing economies “are marked up by 0.1 percentage point for both 2017 and 2018 relative to April, primarily owing to a stronger growth projection for China.”

It said: “But the recovery is not complete; while the baseline outlook is strengthening, growth remains weak in many countries, and inflation is below target in most advanced countries.”

“Weak wage growth is one source of concern, as it leaves nominal interests low and makes countries with the effective lower bound, the point at which central banks can no longer lower interest rates.”