IMF predicts deeper downturn in growth for Nigeria

The decline in global demand for goods and services will cause Nigeria’s economy to contract even more than economists first forecast: it will shrink overall by 5.4%

The International Monetary Fund has predicted an economic downturn for Nigeria.

Experts initially projected Nigeria’s GDP would shrink by 3.4% in April 2020, but it is now expected to witness a deeper contraction of 5.4%.

The global lender said the shrinkage is a by-product of the outbreak of the novel coronavirus disease, which has severely affected global demand for goods and services.

The IMF’s chief economist, Gita Gopinath, said most sub-Saharan nations, including Nigeria, will take longer to record economic recovery.

“Our projection for sub-Saharan Africa overall is a negative 3.2 % in 2020 with a recovery in 2021 of 3.4%,” she said.

Bigger GDP decline

The IMF acknowledged that the poorer economies, most of which are in Africa, have been hit hardest by the pandemic.

In its revised World Economic Outlook, the global lender said: “For many countries that are starting out at lower per capita income levels, when you have a growth hit of 3 percentage points, the distress that it causes in people’s lives is in a bigger magnitude than a similar decline for an advanced economy … these are very difficult times.

“With the relentless spread of the pandemic, prospects of long-lasting negative consequences for livelihoods, job security and inequality have grown more daunting,” the Fund added.

It said that enforced lockdowns globally have led to reduced consumption, which suggests a worse global outlook than previously expected.

In the modest recovery forecast for next year, Nigeria’s economy is projected to rebound by 2.6% in 2021, while South Africa’s is forecast to rebound by 3.5%.

Global stimulus plans

As a way of lessening the economic impact of the COVID-19 pandemic, central banks have announced stimulus plans worth up to US$11 trillion. This is almost four times the $3 trillion initially estimated for the month of April, as borrowing costs continue to rise.

The IMF noted that reduced global GDP could “tip some economies into debt crises and slow activity further”.

GDP for the United States, for instance, is expected to take an 8% hit in 2020. Brazil’s will shrink by 9.1%, Mexico’s by 10.5% and India’s by 4.5%.

E A Alanore

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