…Projected Figure For GDP Down From 3.4% In April to 5.4%
By Kolawole Ojebisi
The International Monetary Fund (IMF) has projected a significant economic contraction for Nigeria,
predicting that the GDP will fall by 5.4% this year after an earlier forecast of 3.4% contraction released in April.
The IMF disclosed this in its overview of the World Economic Outlook for June, titled, ‘A crisis like no other, an uncertain recovery’, which was released on Wednesday.
It stated that, “Global growth is projected at –4.9 per cent 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.”
The report said for the first time there would be negative growth in 2020 across the globe. A relatively gloomy forecast but with subtleties was made for countries across the globe.
It said there were, however, substantial differences across individual economies, reflecting the evolution of the pandemic and the effectiveness of containment strategies; variation in economic structure; reliance on external financial flows, including remittances; and pre-crisis growth trends.
While detailing the differences in individual economics the report read in part, “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.
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.”
According to the report, in Latin America, where most countries are still struggling to contain infections, the two largest economies, Brazil and Mexico, are projected to contract by 9.1 and 10.5 per cent, respectively, in 2020.
“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,” it said.
Nigeria, however, faces economic distress not only from the coronavirus outbreak but also from a sharp fall in crude oil prices, the IMF said in its World Economic Outlook update on Wednesday
Nigeria’s government has said it expects its economy to contract by 3.4% this year. However, last month the finance minister said the economy could shrink by as much as 8.9% in 2020 in a worst-case scenario.
Meanwhile, the cost of living in Nigeria has risen steadily. Annual inflation rose for the ninth straight month in May, to 25-month high of 12.4%.
Sub-Saharan Africa’s gross domestic product is expected to shrink by 3.2% this year due to the impact of the COVID-19 pandemic.
The Washington based organization, however, increased its projection for 2021 to 2.6 per cent from the initial projection of 0.2 per cent.
