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