The International Monetary Fund (IMF) on Tuesday projected that Nigeria’s real economy will grow by 2.3 percent in 2019 and 2.5 percent in 2020 compared with 1.9 percent projected in 2018.
Also, Nigeria’s inflation rate is expected to rise by 11.7 percent next year from 11.3 percent projected in 2019, while the country’s current account balance will contract by 0.2 percent in 2019 from 1.3 percent in 2018.
The country’s inflation rate, a measure of composite changes in the prices of consumer goods and services, increased by 11.24 percent in September from a year earlier compared with 11.02 percent in August, the National Bureau of Statistics (NBS) said Tuesday.
The IMF released the World Economic Outlook on Tuesday which revealed that in sub-Saharan Africa, growth is expected at 3.2 percent in 2019 and 3.6 percent in 2020, slightly lower for both years than in the April 2019 outlook. Higher, albeit volatile, oil prices earlier in the year have supported the subdued outlook for Nigeria and some other oil-exporting countries in the region, but Angola’s economy – because of a decline in oil production – is expected to contract this year and recover only mildly next year.
Gita Gopinath, economic counsellor and director of the Research Department at IMF, who unveiled the World Economic Outlook in Washington DC, said there was a slight upward revision for growth this year and that came mostly from strong agricultural production earlier in the year, but the growth is not high enough to lift the per capita growth into positive tertiary.
“For some time we have been emphasising on a comprehensive package to lift growth. On the element of that, it would have to be stronger non-oil revenue mobilisation as Nigeria has one the lowest rates of revenue in the world which was hit hard by the drop in oil prices that is essential for the country to be able to spend more on priorities such as social safety and infrastructure,” Gopinath said.
She said there was the need for tight monetary policy and simpler unified exchange rate system. Foreign exchange restrictions have also been distorting public and private sector decisions and holding back investments.
“In the case of Nigeria, a lot depends on oil prices and crashes and one thing to keep in mind about Nigeria is the per capita growth remains weak and this why we are talking about restructuring reforms,” she said.
In South Africa, despite a moderate rebound in the second quarter, Gopinath said growth is expected to be weaker in 2019 than projected in the April 2019 WEO following a very weak first quarter, reflecting a larger-than-anticipated impact of labour strikes and energy supply issues in mining, together with weak agricultural production.
While the three largest economies of the region are projected to continue their lacklustre performance, many other economies – typically more diversified ones – are experiencing solid growth. About 20 economies in the region, accounting for about 45 percent of the sub-Saharan African population and 34 percent of the region’s GDP (1 percent of global GDP), are estimated to be growing faster than 5 percent this year while growth in a somewhat larger set of countries, in per capita terms, is faster than in advanced economies.
In sub-Saharan Africa, most countries are projected to grow at rates well above the weighted average for the region.
Meanwhile, the IMF is projecting a modest improvement in global growth to 3.4 percent in 2020, another downward revision of 0.2 percent from its April projections. However, unlike the synchronised slowdown, this recovery is not broad-based and remains precarious.
“The global economy is in a synchronised slowdown and we are, once again, downgrading growth for 2019 to 3 percent, its slowest pace since the global financial crisis,” Gopinath said.
She said growth continues to be weakened by rising trade barriers and increasing geopolitical tensions.
The weakness in growth, she said, is driven by a sharp deterioration in manufacturing activity and global trade, with higher tariffs and prolonged trade policy uncertainty damaging investment and demand for capital goods. In addition, the automobile industry is contracting owing also to a variety of factors, such as disruptions from new emission standards in the euro area and China that have had durable effects. Overall, trade volume growth in the first half of 2019 has fallen to 1 percent, the weakest level since 2012.
“We estimate that the US-China trade tensions will cumulatively reduce the level of global GDP by 0.8 percent by 2020. Growth is also being weighed down by country-specific factors in several emerging market economies, and structural forces – such as low productivity growth and aging demographics in advanced economies,” she said.
HOPE MOSES-ASHIKE, Washington DC
