• Friday, July 19, 2024
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Despite Tinubu’s reforms, IMF retains 3.2% economic growth forecast for Nigeria

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The US-based International Monetary Fund (IMF) has retained its 3.2 percent forecast for Nigeria’s economic growth in 2023, despite President Bola Tinubu’s policy reforms of subsidy removal and unification of exchange rate.

The Washington-based institution on Tuesday released an update to its World Economic Outlook earlier published in April.

The development bank raised the forecast for global economic growth in 2023 by 0.2 percent points to 3.5 percent but left Nigeria’s growth forecast unchanged at 3.2 percent predicted in April despite bold reforms by Tinubu’s administration.

“Growth in Nigeria in 2023 and 2024 is projected to gradually decline, in line with April projections, reflecting security issues in the oil sector,” IMF said.

Tinubu, who took office in May, has embarked on Nigeria’s boldest reform agenda in decades, including the removal of a popular petrol subsidy and restrictions on foreign exchange trading, in a bid to boost sluggish growth in Africa’s largest economy.

“In South Africa, growth is expected to decline to 0.3 percent in 2023, with the decline reflecting power shortages, although the forecast has been revised upward by 0.2 percentage point since the April 2023 WEO, on account of resilience in services activity in the first quarter,” IMF explained.

IMF advised countries to achieve sustained disinflation while ensuring financial stability.

“Central banks should remain focused on restoring price stability and strengthen financial supervision and risk monitoring,”

IMF urged countries to provide liquidity promptly while mitigating the possibility of moral hazard. “They should also build fiscal buffers, with the composition of fiscal adjustment ensuring targeted support for the most vulnerable.”

It added that improvements in the supply side of the economy would facilitate fiscal consolidation and a smoother decline of inflation toward target levels.

“For advanced economies, the growth slowdown projected for 2023 remains significant from 2.7 percent in 2022 to 1.5 percent in 2023, with a 0.2 percentage point upward revision from the April 2023 World Economic Outlook.

IMF stated that for emerging markets and developing economies, growth is projected to be broadly stable at 4.0 percent in 2023 and 4.1 percent in 2024, with modest revisions of 0.1 percentage point for 2023 and –0.1 percentage point for 2024.

Pierre-Olivier Gourinchas, IMF’s chief economist during his presentation said inflation remains the arch-enemy of global growth.

He said, “Inflation could remain high or increase, for instance from an intensification of Russia’s war in Ukraine or extreme weather-related events.