Speaking in Abuja on Monday, the IMF resident representative in Nigeria, Gene Leon, energy shortages and delayed budget weigh on output of the economy.
Though the GDP shrunk by 0.4 percent in three months through March, the first contraction in more than a decade, Leon said Nigeria will still experience some growth in the second half of the year , but he added that it would not be enough to improve initial shrinkage
“I think there is a high likelihood that the year 2016 as a whole will be a contractionary year,” Bloomberg quoted Leon as saying.
“While the economy should look better in second half of the year, growth will probably not be sufficiently fast, sufficiently rapid to be able to negate the outcome of the first and second quarters.”
The IMF had cut it lending growth forecast for Nigeria to 2.3 percent in its April Regional Economic Outlook from 3.2 percent projected in February.
The World Bank lowered its forecast to 0.8 percent last month, citing weakness from oil output disruptions and low prices.
According to IMF, Last year expansion of 2.7 percent was the slowest in two decades.
Leon said, “Most people would agree that if you should fix one thing in this country, it should be power. There is a need to start changing the power equation from 2016, from today, not tomorrow or later.”
Leon said while inflation would probably continue its upward trend through the end of this year, it might not exceed 20 per cent by the end of 2016.
The central bank’s Monetary Policy Committee “may be open to tolerating a little more inflation if growth emerges as the priority, as opposed to choking inflation and squeezing the little life out of growth,” Leon said.
“But the central bank, in conjunction with the Monetary Policy Committee, needs to be clear to participants in markets what exactly their priority is,” he added.