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IMF revises down Nigeria’s 2019 growth forecast to 2 per cent

22 Jan 2019
Financial Nigeria

Summary

The IMF warned that the risks of “more significant downward corrections are rising.”

Christine Lagarde, Managing Director, International Monetary Fund

The International Monetary Fund (IMF) has revised down its estimates for Nigeria’s economic growth for 2019 and 2020. According to its World Economic Outlook (WEO), released on Monday as the World Economic Forum in Davos, Switzerland, kicked off, the IMF said the downward revision of the country's growth was due to softening oil prices.  

The latest growth projection is down by 0.3 percentage point compared to the previous projection in October 2018. It is, nevertheless, higher by 0.1 percentage point compared to Nigeria's estimated 1.9 per cent GDP growth rate for 2018. In a report, titled, “A Weakening Global Expansion,” the IMF warned that the risks of “more significant downward corrections are rising.”

The growth forecasts for sub-Saharan Africa in 2019 and 2020 were also revised downward by 0.3 percentage point to 3.5 per cent and 3.6 per cent, respectively. These projections are still, however, higher than the IMF estimated growth of 2.9 per cent for the region in 2018.   

Following an exit from recession last December, South Africa is expected to grow from 0.8 per cent in 2018 to 1.4 per cent in 2019 and 1.7 per cent next year.

The IMF has also cut global growth projection to 3.5 per cent for 2019 and 3.6 per cent for 2020 — making it the second downturn revision in three months. But apart from the softening oil prices — Brent crude oil futures were down by 1.3 per cent as at 10.00GMT on Tuesday to $61.83, from $62.64 recorded at 01:06GMT on Monday — other risks to growth outlook, according to the IMF, include trade tensions and bearish sentiment in the financial markets.

According to the Fund, "other factors adding downside risk to global investment and growth include uncertainty about the policy agenda of new administrations, a protracted US federal government shutdown, as well as geopolitical tensions in the Middle East and East Asia."  

There are also concerns from China, where latest figures announced on Monday show GDP growth rate of 6.6 per cent in 2018 — the slowest pace since 1990. The United Kingdom’s impending exit from the European Union (EU) is still uncertain. As the deadline for the UK’s departure from the EU approaches, many believe the chance of an exit without a deal is becoming more likely.

“After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” Christine Lagarde, IMF’s Managing Director, said in Davos. “But even as the economy continues to move ahead ... it is facing significantly higher risks.”


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