IMF’s growth forecast for Nigeria, others dim

Hopes of a quick recovery from the ongoing economic crisis in Nigeria and sub-Sahara Africa are dim, going by the latest forecast of the International Monetary Fund (IMF).

IMF, in its World Economic Outlook released yesterday pointed out that the persistent lower commodity prices and a less-supportive global environment will continue to decelerate economic activity in sub-Saharan Africa.

Of the 23 commodity-exporting economies, growth will depress at 1.4 per cent by the end of the year for Nigeria, South Africa, Angola, among others.

Côte d’Ivoire and Senegal economies in West Africa and Ethiopia and Kenyan economies in East Africa are projected to grow at six to eight per cent in the next couple of years.

In recent months, the near-term prospects of oil exporters in particular have worsened, notwithstanding the modest uptick in oil prices.

The adverse effects of the decline in prices of 2014–15, first mainly felt within the oil-related sectors, have spread to the entire economy, leading to a more entrenched slowdown.

Consequently, “Output among oil exporters is expected to shrink by 1.3 percent this year, weighed down by a deep contraction in Nigeria, but also in Chad, Equatorial Guinea, and South Sudan, while Angola will barely escape recession.

“Likewise, countries such as the Democratic Republic of Congo, Ghana, Zambia, and Zimbabwe are decelerating sharply or stuck in low gear.

“By contrast, non-resource-intensive countries continue to perform well. Growth for this group as a whole is expected at 5.5 percent this year—just below the average six per cent experienced during 2000–14.

“They benefit from a lower oil import bill and an improved business environment, while strong infrastructure investment continues to help sustain the growth momentum,” the report said.

The report again reiterated the need for structural reforms to complement macroeconomic policies, so as to set growth on a sustainable footing and preserve competitiveness.

“In particular, measures to ensure reliable sources of fiscal revenue and efficient public spending would go a long way toward protecting against untenable increases in public debt.

“Domestic revenue mobilisation measures should take precedence to reduce overreliance on commodity-related revenue. Overly abrupt cuts to productive capital spending should be avoided to support the diversification agenda that will be a prerequisite for the growth rebound,” the IMF report concluded.