IMF Raises Nigeria’s 2019 Growth Forecast to 2.3%

Obinna Chima

The International Monetary Fund (IMF) has raised Nigeria’s Gross Domestic Product (GDP) projection for 2019 to 2.3 per cent, up from the 1.9 per cent it had predicted for the country previously.

The fund stated this in its World Economic Outlook (WEO) update titled, ‘Less Even Expansion, Rising Trade Tensions,’ released Monday.

The multilateral institution attributed its higher growth forecast for the country in 2019 to improved outlook for oil prices.

Although Nigeria’s second quarter 2018 GDP figures are yet to be released by the National Bureau of Statistics (NBS), the country had recorded growth rate of 1.95 per cent in the first quarter of the year, lower than the 2.11 per cent recorded in the fourth quarter of 2017.

In addition, the IMF in the latest report noted that the recovery in Sub-Saharan Africa was set to continue, supported by the rise in commodity prices.

For the region, growth was expected to increase from 2.8 per cent in 2017, to 3.4 per cent this year, rising further to 3.8 per cent in 2019 (0.1 percentage point higher for 2019 than forecast in the April WEO).

The Fund stated, “The upgraded forecast reflects improved prospects for Nigeria’s economy. Its growth is set to increase from 0.8 per cent in 2017 to 2.1 per cent in 2018 and 2.3 per cent in 2019 (0.4 percentage point higher than in the April WEO for 2019).

“Despite the weaker-than-expected first quarter outturn in South Africa (in part due to temporary factors), the economy is expected to recover somewhat over the remainder of 2018 and into 2019 as confidence improvements associated with the new leadership are gradually reflected in strengthening private investment.”

Commenting on the latest WEO, The Economic Counsellor and Director of the Research Department, IMF, Maurice Obstfeld, noted that overall growth in sub-Saharan Africa would exceed population growth over the next couple of years, allowing per capita incomes to rise in many countries.

However, he noted that despite some recovery in commodity prices, growth would still fall short of the levels seen during the commodity boom of the 2000s.

“Adverse developments in Africa—civil strife or weather-related shocks, for example—could intensify outward migration pressures, especially toward Europe,” Obstfeld explained.

According to him, amid rising tensions over international trade, the broad global expansion that began roughly two years ago has plateaued and become less balanced.

He stated that growth remains generally strong in advanced economies, but has slowed in many others, including countries in the euro area, Japan, and the United Kingdom.

He said, “In contrast, GDP continues to grow faster than potential and job creation is still robust in the United States, driven in large part by recent tax cuts and increased government spending.

“Even US growth is projected to decelerate over the next few years, however, as the long cyclical recovery runs its course and the effects of temporary fiscal stimulus wane.

“For the advanced economies, we project 2018 growth of 2.4 per cent, down 0.1 percentage point from our April WEO. We maintain an unchanged forecast of 2.2 per cent growth in those economies for 2019.

“For emerging market and developing economies as a group, we still project growth rates of 4.9 per cent for 2018 and 5.1 per cent for 2019. These aggregate numbers, however, conceal diverse changes in individual country assessments,” he added.

He urged countries to embrace multilateral cooperation.

“A truly global effort is also needed to curtail corruption, which undermines faith in government in so many countries. “Finally, recurrent surges in international migration pressures, which have proven so politically destabilising recently, cannot be avoided without cooperative action to improve international security, support the Sustainable Development Goals, and resist climate change and its effects,” he said.