The International Monetary Fund (IMF) has projected hike in the Nigeria’s economic growth rate in 2017 to .8 percent from the 0.2 percent that the Fund had projected for the country last October. In its latest World Economic Outlook update, the IMF said its forecasts for Nigeria were revised up mainly to reflect high oil production due to security improvements in the country. The Fund also revised its forecast for Nigeria in 2018 to 2.3 percent from its previous projection of 0.7 percent. The projections came about a week after the World Bank released its January 2017 Global Economic Prospects report, corroborating projections by the Federal Government that Nigeria will exit recession this year.
The World Bank stated in its report that: “Growth in South Africa is expected to edge up to a 1.1 percent pace this year. Nigeria is forecast to rebound from the recession and grow at one percent pace. Angola is projected to expand at a 1.2 percent pace.” However, in its latest World Economic Outlook update, the IMF stated that although economic activity is projected to pick up the pace in 2017 and 2018, especially in emerging market and developing economies after a lacklustre 2016. “There is a wide dispersion of possible outcomes around the projections, given the uncertainty surrounding the policy stance of the incoming U.S. administration and its global ramifications.” According to the Fund, economic activity in both advanced economies and emerging markets developing economies is forecast to accelerate in 2017–18, with global growth projected to be in line with its October forecasts at 3.4 per cent and 3.6 per cent, respectively. The IMF, however, noted that while outlook for advanced economies has improved for 2017–18, reflecting stronger activity in the second half of 2016, as well as a projected fiscal stimulus in the United States, growth prospects have marginally worsened for emerging market and developing economies, where financial conditions have generally tightened primarily as a result of the sharp drop in commodity prices. “For the countries hardest hit by the decline in commodity prices, the recent market firming provides some relief, but the adjustment to re-establish macroeconomic stability is urgent. This implies allowing the exchange rate to adjust in countries not relying on an exchange rate peg, tightening monetary policy were needed to tackle increases in inflation, and ensuring that needed fiscal consolidation is as growth-friendly as possible. “The latter is particularly important in countries with pegs, where the exchange rate cannot act as a shock absorber. Over the longer term, countries highly dependent on one or a few commodity products should work to diversify their export bases,” the Fund stated. It also advised low-income countries that have seen their fiscal buffers decrease over the last few years to prioritize the restoration of those buffers, “while continuing to spend efficiently on critical capital needs and social outlays, strengthen debt management, improve domestic revenue mobilization, and implement structural reforms – including in education – that pave the way for economic diversification and higher productivity.” However, despite what it says is the improved outlook for the global economy, the IMF warns that risks remain. As the Fund puts it: “A potential widening of global imbalances coupled with sharp exchange rate movements, should those occur in response to major policy shifts, could further intensify protectionist pressures. Increased restrictions on global trade and migration would hurt productivity and incomes, and take an immediate toll on market sentiment. “In many low-income economies, low commodity prices and expansionary policies have eroded fiscal buffers and led in some cases to a precarious economic situation, heightening their vulnerability to further external shocks.”