The International Monetary Fund (IMF) has predicted Nigeria’s economy would shrink by 0.5 percentage point in fourth quarter (Q4) of 2022.
The IMF put Nigeria’s economic outlook for Q4 of 2021 at 2.4 per cent while it projected 1.9 per cent for Q4 of 2022, representing a decline of 0.5 percentage point.
The global financial body equally lowered its global growth projection for 2021 to 5.9 per cent while retaining 2022 figures at 4.9 per cent.
The 5.9 per cent figure is 0.1 percentage point lower for 2021 than in the July forecast.
The latest growth figures are contained in the IMF World Economic Outlook released yesterday which finds that, “although global recovery continues, momentum has weakened, therefore , there is a slight downward revision for global growth this year and an unchanged projection for next year (4.9 percent).”
IMF explained that the downward revision for 2021 reflects a downgrade for advanced economies—in part due to supply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics.
This, it said, is partially offset by stronger near-term prospects among some commodity-exporting emerging market and developing economies.
It added that rapid spread of Delta and the threat of new variants have increased uncertainty about how quickly the pandemic can be overcome. Policy choices have become more difficult, with limited room to maneuver.
It explained that modest headline revision masks large downgrades for some countries, the Fund reports in its World Economic Outlook.
“The global recovery continues, but momentum has weakened, hobbled by the pandemic. We have a slight downward revision for global growth for this year to 5.9 per cent. For next year, our projection remains unchanged at 4.9 percent.
“The divergences in growth prospects across countries, however, persist and remains a major concern,” said Gita Gopinath, Economic Counsellor and Director of the Research Department at IMF.
Gopinath added that risks to economic prospects have increased and policy trade-offs have become more complex in the ongoing COVID-19 pandemic. Monetary policy will need to walk a fine line between tackling inflation and financial risks and supporting the economic recovery.
“One of the major risks remains that there could be new variants of the virus that could further slow back the recovery. We’re seeing major supply disruptions around the world that are also feeding inflationary pressures, which are quite high and financial risk taking also is increasing, which poses an additional risk to the outlook,” explained Gopinath.