New Telegraph

IMF retains Nigeria’s 2022 growth forecast at 3.4%

…expresses concern over debt distress

 

The International Monetary Fund (IMF) has retained Nigeria’s 3.4 per cent economic growth projection for 2022, citing the  effects of high oil prices.

The Fund, which disclosed this in its World Economic Outlook (WEO) for July 2022 titled, “Gloomy and More Uncertain,” released yesterday, revised up its growth forecast for Nigeria in 2023 to 3.2 per cent from the 3.1 per cent it predicted in April.

It stated: “The outlooks for countries in the Middle East and Central Asia and sub-Saharan Africa remain on average unchanged or positive, reflecting the effects of elevated fossil fuel and metal prices for some commodity-exporting countries.”

In its latest Global Economic Prospects report released last month, the World Bank, raised its 2022 growth forecast for Nigeria to 3.4 per cent from the 2.5 per cent it projected for the country in January, citing  country in January, citing high oil prices, further recovery in agriculture and manufacturing as well as key structural reforms such as, the Petroleum Industry Act (PIA).

 

However, the IMF, in its latest WEO, further reduced growth projections for the global economy to 3.2 per cent and 2.9 per cent in 2022 and 2023 respectively from the 3.6 per cent it predicted for both years in April.

It explained that the downward revision in projections for the global economy was due to factors, such as global inflation, the war in Ukraine and the economic slowdown in China — the world’s major supply chain hub.

The Bretton Woods institutionstated:“Atentative recovery in 2021 has been followed by increasingly gloomy developments in 2022. Performance was slightly better than expected in the first quarter, but world real GDP is estimated to have shrunk in the second quarter— the first contraction since 2020—owing to economic downturns in China and Russia.

“Downside risks discussed in the April 2022 World Economic Outlook are materializing, with higher inflation worldwide, especially in the United States and major European economies, triggering a sharp tightening in global financial conditions; a sharper-thananticipated slowdown in China, reflecting COVID-19 outbreaks and lockdowns; and further negative crossborder effects from the war in Ukraine.”

On emerging market and developing economies, the IMF explained that: “Negative revisions to growth in 2022–23 reflect mainly the sharp slowdown of China’s economy and the moderation in India’s economic growth. The revision in emerging and developing Asia is correspondingly large, at 0.8 percentage point in the baseline for 2022.

This revision includes a 1.1 percentage point downgrade to growth in China, to 3.3 percent (the lowest growth in more than four decades, excluding the initial COVID-19 crisis in 2020), owing primarily to the aforementioned COVID-19 outbreaks and lockdowns.”

On inflation, the Fund said it had revised up its baseline projection for global inflation to 8.3 percent in 2022 on a fourth-quarterover- fourth-quarter basis, from 6.9 percent in the April 2022 WEO, adding that the upside inflation revision in 2022 is larger for advanced economies, where it is expected to reach 6.3 percent from 4.8 percent projected in the April 2022 WEO on a fourth-quarter-over-fourthquarter basis, driven by significant increases in headline inflation among such major economies as the United Kingdom (a 2.7 percentage point upward revision to 10.5 percent) and the euro area (a 2.9 percentage point upward revision to 7.3 percent).

However, the IMF stated that: “Forecasts for 2023 are relatively unchanged––up by only 0.2 percentage point on a fourth-quarter over-fourthquarter basis––reflecting confidence that inflation will decline as central banks tighten policies and energy price base effects turn negative.”

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