The International Monetary Fund (IMF) has predicted that the Nigerian economy will contract by 5.4 per cent in 2020, lower than the 3.4 per cent negative growth it had estimated for the country in April.
However, the fund anticipates that by 2021, the country’s GDP will grow by 2.6 per cent.
IMF’s Chief Economist and Director of the Research Department, Ms. Gita Gopinath, gave the projection during an online press conference on the latest World Economic Outlook (WEO) released yesterday in Washington DC.
This is just as a Director at Fitch Ratings yesterday warned that a sharp rise in Nigeria’s sovereign debt and a ballooning financing gap could trigger a rating downgrade.
Speaking on the multilateral institution’s latest projection for Nigeria, Gopinath said: “Our projection for sub Saharan Africa overall is -3.2 per cent in 2020 with recovery in 2021 at 3.4 per cent. So, this is a significant downward revision and we have some very large negative growth forecast for instance; South Africa is -8 per cent and for Nigeria, it is -5.4 per cent growth.”
The IMF, however, said growth projection in some other emerging and developing economies were also revised downward.
“The downgrade also reflects larger spillovers from weaker external demand. The downward revision to growth prospects for emerging market and developing economies over 2020–2021 (2.8 percentage points) exceeds the revision for advanced economies (1.8 percentage points). “Excluding China, the downward revision for emerging market and developing economies over 2020–21 is 3.6 percentage points.
“Overall, growth in the group of emerging market and developing economies is forecast at –3.0 per cent in 2020, two percentage points below the April 2020 WEO forecast. Growth among low-income developing countries is projected at –1.0 per cent in 2020, some 1.4 percentage points below the April 2020 WEO forecast, although with differences across individual countries.
“Excluding a few large frontier economies, the remaining group of low-income developing countries is projected to contract by –2.2 per cent in 2020.
“For the first time, all regions are projected to experience negative growth in 2020. There are, however, substantial differences across individual economies, reflecting the evolution of the pandemic and the effectiveness of containment strategies; variation in economic structure (for example, dependence on severely affected sectors, such as tourism and oil); reliance on external financial flows, including remittances; and pre-crisis growth trends,” it stated.
According to the IMF, fiscal responses since the outbreak of COVID-19 have resulted in an increase in government debts across all emerging economies.
It said: “Government debt is now projected to average 63 per cent of GDP in 2020, continuing its upward trend with a 10 percentage point surge from a year ago.