IMF Lowers Nigeria’s Growth Projection, Says Economy to Now Shrink by 5.4%

IMF Reduces Nigeria’s Growth, Sayings Nigeria to Now Contract by 5.4%

The International Monetary Fund (IMF) has lowered Nigeria’s projected growth rate for the 2020 fiscal year.

In the Fund’s World Economic Outlook titled ‘A crisis like no other, an uncertain recovery’ that was released on Wednesday, the IMF said Nigeria’s economy will shrink by as much as 5.4 percent in 2020.

This is far lower than the 3.4 percent contraction predicted in the Month of April.

“The disruptions due to the pandemic, as well as significantly lower disposable income for oil exporters after the dramatic fuel price decline, imply sharp recessions in Russia (–6.6 per cent), Saudi Arabia (–6.8 per cent), and Nigeria (–5.4 per cent), while South Africa’s performance (–8.0 per cent) will be severely affected by the health crisis,” the IMF stated.

Also, the growth forecast for the world economy was reduced by 1.9 percent from April to -4.9 percent in June, saying COVID-19 had impacted the world’s activity more than previously anticipated.

It stated that ‘Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook forecast.

“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast.”

According to the report, this is the first time all regions of the world are projected to record negative growth in a single year.

“In China, where the recovery from the sharp contraction in the first quarter is underway, growth is projected at 1.0 per cent in 2020, supported in part by policy stimulus,” the report stated.

“India’s economy is projected to contract by 4.5 per cent following a longer period of lockdown and slower recovery than anticipated in April.”

This is coming a day after Jesmin Rahman, IMF’s Chief and Senior Resident Representative for Nigeria, said Nigeria’s rising debt profile is not an issue but weak revenue generation to GDP is.

She said, “The first vulnerability comes from having very low level of fiscal revenues. Total revenue at seven per cent of GDP is less than half of sub-Saharan Africa’s average and far lower than the average in oil exporting countries.