COVID-19 to Shrink Nigeria’s Economy by 3.4% in 2020- IMF

• COVID-19 to Shrink Nigeria’s Economy by 3.4% in 2020- IMF

Ravaging COVID-19 could plunge Nigeria, Africa’s largest economy, into a second recession in five years in 2020, according to the International Monetary Fund (IMF).

In its latest report titled ‘World Economic Outlook April 2020’ released on Tuesday, the Fund said the coronavirus pandemic has raised human costs and as such costs of isolation, widespread closures that slow down the spread of the virus and cost of maintaining overwhelmed health care systems have dragged on economic activities and changed governments approach to growth.

The Fund said: “Strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.

“Countries urgently need to work together to slow the spread of the virus and to develop a vaccine and therapies to counter the disease. Until such medical interventions become available, no country is safe from the pandemic (including a recurrence after the initial wave subsides) as long as transmission occurs elsewhere.”

The Fund predicted that Nigeria’s economy would contract by 3.4 percent in 2020 and recover in 2021 with a growth rate of 2.4 percent.

While South Africa, Africa’s second-largest economy, was forecast to shrink by 5.8 percent this year and grow by 4 percent next year.

“Growth in Nigeria and South Africa expected at –3.4 percent and –5.8 percent, respectively. Following the dramatic decline in oil prices since the beginning of the year, near-term prospects for oil-exporting countries have deteriorated significantly: the growth rate for the group is projected to drop to –4.4 percent in 2020,” the Fund stated.

Sub-Saharan Africa would shrink by 1.6 percent in 2020 and rebound with 4.1 percent growth next year.