IMF Downgrades Growth Forecast For Nigeria’s Economy To 2%
The International Monetary Fund (IMF) yesterday announced a downward review of its growth forecast for Nigeria’s economy to 2.0 percent for 2019 citing decline in crude oil prices.
The IMF made this announcement in its World Economic Outlook, WEO, January update released Tuesday, projecting that global economic growth will weaken to 3.5 percent this year due to the negative impact of the trade war between United States and China.
IMF downgrades growth forecast for Nigeria’s economy to 2% IMF The 2.0 percent forecast for Nigeria in 2019 is three percentage points lower than the 2.3 percent forecast by IMF in its World Economic Outlook, October 2018.
The Fund also revised downward its 2020 growth forecast for Nigeria to 2.2 percent.
The 2.0 percent growth forecast for 2019 is lower than the forecast released last week by some the nation’s investment firms and banks. Last week, FSDH Merchant Bank projected 2.48 percent economic growth for the country in 2019, while Coronation Merchant Bank and Afrinvest Limited projected 2.25 percent and 2.5 percent growth respectively.
Forecast for Sub-Saharan Africa and crude oil The IMF also downgraded its growth forecast for Sub-Saharan Africa to 3.5 percent in 2019 and 3.6 percent in 2020, citing impact of softening oil prices on the economies Nigeria and Angola.
“In sub-Saharan Africa, growth is expected to pick up from 2.9 percent in 2018 to 3.5 percent in 2019, and 3.6 percent in 2020. For both years the projection is 0.3 percentage point lower than last October’s projection, as softening oil prices have caused downward revisions for Angola and Nigeria. The headline numbers for the region mask significant variation in performance, with over one-third of sub-Saharan economies expected to grow above 5 percent in 2019–20.”
The IMF equally revised downward its forecast for average crude oil price in 2019 to $60 per barrel citing fears of softening global demand.
“Crude oil prices have been volatile since August, reflecting supply influences, including US policy on Iranian oil exports and, more recently, fears of softening global demand. As of early January, crude oil prices stood at around $55 a barrel, and markets expected prices to remain broadly at that level over the next 4–5 years.
“Average oil prices are projected at just below $60 per barrel in 2019 and 2020 (down from about $69 and $66, respectively, in the last WEO). Metals prices are expected to decrease 7.4 percent year-over-year in 2019 (a deeper decline than anticipated last October), and to remain roughly unchanged in 2020. Price forecasts for most major agricultural commodities have been revised modestly downwards”, the IMF said.
Global economy to grow at 3.5% The IMF projected 3.7 percent growth for the global economic in 2018 but said this growth will weaken to 3.5 percent this year before rising to 3.6 percent in 2020. Explaining the factors for its forecast, the IMF said: “The global expansion has weakened. Global growth for 2018 is estimated at 3.7 percent, as in the October 2018 World Economic Outlook (WEO) forecast, despite weaker performance in some economies, notably Europe and Asia.
The global economy is projected to grow at 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage point below last October’s projections.
“The global growth forecast for 2019 and 2020 had already been revised downward in the last WEO, partly because of the negative effects of tariff increases enacted in the United States and China earlier that year.
The further downward revision since October in part reflects carry over from softer momentum in the second half of 2018—including in Germany following the introduction of new automobile fuel emission standards and in Italy where concerns about sovereign and financial risks have weighed on domestic demand—but also weakening financial market sentiment as well as a contraction in Turkey now projected to be deeper than anticipated.
