…says country’s economic decline affects developing countries
The International Monetary Fund (IMF) has said that increased big government spending, the rise in oil prices and continued growth in agriculture, will drive Nigeria’s economic growth to 0.8 per cent in 2017. IMF Chief Economist, Maurice Obstfeld, stated this while unveiling the Fund’s World Economic Outlook in Washington yesterday.
The IMF said: “A broadly similar picture holds for low-income developing countries.
The lion’s share of the 1.6 percentage point decline in growth between 2011 and 2016 is attributable to the drastic slowdown in Nigeria, an oil exporter that in 2016 accounted for more than 20 per cent of purchasing-power-parity GDP of low-income countries and about half of the GDP of commodity exporters in this country group.”
While affirming its earlier forecast that Nigeria will exit recession this year, the IMF said: “After contracting by 1.5 per cent in 2016 because of disruptions in the oil sector coupled with foreign exchange, power, and fuel shortages, output in Nigeria is projected to grow by 0.8 per cent in 2017 as a result of a recovery in oil production, continued growth in agriculture, and higher public investment.”
The IMF, however, stated that the country’s economic decline affected low income developing nations, adding that global growth will continue with the help of advanced and emerging economies.
“We project the world economy to grow at a pace of 3.5 per cent in 2017, up from 3.1 per cent last year, and 3.6 per cent in 2018. Acceleration will be broad based across advanced, emerging, and low income economies, building on gains we have seen in both manufacturing and trade,” Obstfeld said.
He added that commodity prices “have firmed since early 2016, but at low levels, and many commodity exporters remain challenged – notably in the Middle East, Africa, and Latin America.”
“At the same time, a combination of adverse weather conditions and civil unrest threaten several low-income countries with mass starvation. In Sub-Saharan Africa, income growth could fall slightly short of population growth, but not by nearly as much as last year. “In sub-Saharan Africa, a modest recovery is foreseen in 2017.
Growth is projected to rise to 2.6 per cent in 2017 and 3.5 per cent in 2018, largely driven by specific factors in the largest economies, which faced challenging macroeconomic conditions in 2016,” the IMF said in the report.
According to the Fund, Nigeria’s drastic economic decline from 2011 to 2016 adversely affected low income developing countries.
It stated that: “For emerging market and developing economies as a group, the decline in growth between 2011 and 2016 was 2.2 percentage points, with about twothirds of this decline attributable to weaker growth in commodity exporters – the rest being accounted for by slower growth in China and in other emerging market and developing economies.
“Commodity exporters account for most of the projected pickup in emerging market and developing economy growth in 2017–19, even though their projected growth recovery is relatively modest compared with the striking decline in their growth rates over the past five years.”
The Fund also said: “Inflation in 2017 is expected to remain at double-digit levels in a few large economies in sub-Saharan Africa (for example, Nigeria, Angola and Ghana), reflecting, among other factors, the pass through of large depreciation.”