The International Monetary Fund (IMF) has indicated that the Nigerian economy is expected to grow by 3.4 per cent this year, due to a stronger performance in the non-oil sector.
This upwards review is coming despite a negative growth forecast by the Fund for the global economy primarily occasioned by the Russian-Ukraine war that is causing a hike in global commodity prices.
The revised growth forecast puts Nigeria amongst the few countries that got an upward growth for the current year.
The IMF predicted global growth to slow from an estimated 6.1 per cent in 2021 to 3.6 per cent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January.
Speaking on the sidelines of the ongoing IMF/World Bank spring meetings, the Fund said it expects inflation to remain elevated for longer than in the previous forecasts, driven by war-induced commodity price increases and broadening price pressures.
This upward review is stronger than the 2.7 per cent projected growth for the country which the Fund released in October last year. The fund also reviewed upward the country’s 2023 growth forecast from 2.7 per cent to 3.1 per cent.
The IMF stated this in its latest World Economic Outlook (WEO) report released yesterday.
Speaking during a press briefing at the ongoing hybrid spring meetings in collaboration with the World Bank in Washington DC, division chief, Research Department, Malhar Nabar said: “The heterogeneity is a key factor, if you look at the global revisions that we have 86 per cent of the global economy revising down and Nigeria is one of the few that’s actually revised up, and there are two main factors: one is what you mentioned the increased oil price which represents a favourable terms of trade effect for Nigeria, will increase oil production and oil exports.
“And then the second factor is the strong momentum that we saw in the non-oil sector part of the economy. The non-oil sector of the economy is also showing strong momentum going into this year which helped lift the outcome growth forecasts that we have for Nigeria to 3.4 per cent for this year, and 3.1 per cent for next year, and that is 0.7 percentage point increase for this year and 0.4percentage point increase.”
On his part, IMF chief economist, Pierre-Olivier Gourinchas, noted that oil price increase also played a role in this upward review.
“Nigeria is an energy producer and exporter, and I think that explains a good part of the upward revision in our growth projections,” he said.
According to the latest WEO, Nigeria’s upward review was due to increase in oil prices. “The increase in oil prices has however lifted growth prospects for the region’s oil exporters, such as Nigeria. Overall, growth in sub-Saharan Africa is projected at 3.8 percent in 2022.
“In sub-Saharan Africa, food prices are also the most important channel of transmission, although in slightly different ways. Wheat is a less important part of the diet, but food in general is a larger share of consumption. Higher food prices will hurt consumers’ purchasing power particularly among low-income households and weigh on domestic demand. Social and political turmoil, most notably in West Africa, also weigh on the outlook.
The ongoing war in Ukraine and sanctions on Russia are expected to reduce global growth in 2022 through direct impacts on the two countries and global spillovers. This shock comes just as the threat from the Omicron variant appeared to be fading, with many parts of world moving past the acute phase of the pandemic,” it stated.
“For 2022, inflation is projected at 5.7 per cent in advanced economies and 8.7 per cent in emerging market and developing economies – 1.8 and 2.8 percentage points higher than projected in January,” the international financial institution said.
It advised governments to harness positive structural change wherever possible, by embracing the digital transformation and retooling and reskilling workers to meet its challenges.