IMF cuts Nige­ria’s growth fore­cast to -1.8% Avi­a­tion fuel now N200/ litre, tick­ets hike by 40%

Daily Trust - - BUSINESS - By Hamisu Muham­mad

The In­ter­na­tional Mone­tary Fund (IMF) has fur­ther down­graded the growth pro­jec­tions of Nige­ria to neg­a­tive in its lat­est World Eco­nomic Out­look (WEO) re­leased yesterday.

The out­look pro­jected that Nige­ria’s Gross Do­mes­tic Prod­uct (GDP) will now grow at -1.8 per­cent from the 2.7 per­cent pro­jected in April, 2016. The fund said the neg­a­tive growth pro­jec­tion is nec­es­sary as the econ­omy ad­justs to for­eign cur­rency short­ages as a re­sult of lower oil re­ceipts, low power gen­er­a­tion, and weak in­vestor con­fi­dence.

With the new pro­jec­tion, Nige­ria will now join the league of coun­tries like Rus­sia and Brazil that are al­ready at neg­a­tive growth due to sim­i­lar chal­lenges.

The out­look for other emerg­ing mar­kets and de­vel­op­ing economies re­mains di­verse. Growth pro­jec­tions were re­vised down sub­stan­tially in sub-Sa­ha­ran Africa, re­flect­ing chal­leng­ing macroe­co­nomic con­di­tions in its largest economies, which are ad­just­ing to lower com­mod­ity rev­enues.

“In South Africa, GDP is pro­jected to re­main flat in 2016, with only a mod­est re­cov­ery next year.

“In the Mid­dle East, oil ex­porters are ben­e­fit­ing from the re­cent mod­est re­cov­ery in oil prices while con­tin­u­ing fis­cal con­sol­i­da­tion in re­sponse to struc­turally lower oil rev­enues, but many coun­tries in the re­gion are still plagued by strife and con­flict,” it said,

Ef­forts to get the re­ac­tions of the Min­istry of Bud­get and Na­tional Plan­ning and that of fi­nance proved abortive as the of­fi­cials at the two min­istries failed to re­spond to var­i­ous re­quests sent to them via SMS and did not pick calls from our re­porters.

De­clines in ex­cess oil sup­ply - due mainly to a gradual slow­down in non-OPEC pro­duc­tion and some sup­ply dis­rup­tions (no­tably in Nige­ria and Canada) - helped bol­ster oil prices. This was re­flected in an eas­ing of oil ex­porters’ sov­er­eign bond spreads from their Fe­bru­ary-March highs.

Bond yields in the main ad­vanced economies de­clined fur­ther, re­flect­ing com­pressed term pre­mia as well as ex­pec­ta­tions of a more gradual pace of mone­tary pol­icy nor­mal­i­sa­tion, while stock mar­ket val­u­a­tions re­mained broadly steady.

Among ad­vanced economies, the United King­dom ex­pe­ri­enced the largest down­ward re­vi­sion in fore­casted growth. While growth in the first part of 2016 ap­peared to have been slightly stronger than ex­pected in April, the in­crease in uncertainty fol­low­ing the ref­er­en­dum is pro­jected to sig­nif­i­cantly weaken do­mes­tic de­mand rel­a­tive to pre­vi­ous fore­casts, with growth re­vised down by about 0.2 per­cent­age points for 2016 and by close to 1 per­cent­age point in 2017.

In China, the near-term out­look has im­proved due to re­cent pol­icy sup­port. Bench­mark lend­ing rates were cut five times in 2015, fis­cal pol­icy turned ex­pan­sion­ary in the se­cond half of the year, in­fras­truc­ture spend­ing picked up, and credit growth ac­cel­er­ated.

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