Juliana Taiwo-Obalonye, Washington DC
The International Monetary Fund (IMF) has predicated that Nigeria’s Gross Domestic Product (GDP) growth will remain lacklustre in 2019.
Gita Gopinath, International Monetary Fund chief economist, stated this in the World Economic Outlook (WEO) for October 2019, released on the sidelines of the ongoing IMF/World Bank Annual Meetings in Washington DC Monday.
GDP growth in Nigeria stood at 1.94 per cent as of the second quarter of 2019.
“Growth in low-income developing countries remains robust, though growth performance is more heterogeneous within this group. Robust growth is expected for non-commodity exporters, such as Vietnam and Bangladesh, while the performance of commodity exporters, such as Nigeria, is projected to remain lacklustre.
“In sub-Saharan Africa, growth is expected at 3.2 percent in 2019 and 3.6 percent in 2020, slightly lower for both years than in the April 2019 WEO. Higher, albeit volatile, oil prices earlier in the year have supported the subdued outlook for Nigeria and some other oil-exporting countries in the region, but Angola’s economy -because of a decline in oil production -is expected to contract this year and recover only mildly next year.
“In South Africa, despite a moderate rebound in the second quarter, growth is expected to be weaker in 2019 than projected in the April 2019 WEO following a very weak first quarter, reflecting a larger-than-anticipated impact of labour strikes and energy supply issues in mining, together with weak agricultural production.”
Asked on specific findings on Nigeria, Gopinath said: “In the case of Nigeria, I will like to point at the oil prices and the oil prospects.
“One thing to keep in mind about Nigeria is that per capita growth remains weak and this why we are talking about restructuring and reforms.”
Also speaking, the Division Chief, Research Department, IMF, Oya Celasun, stressed that the multilateral institution had earlier in the year, slightly reviewed upward Nigeria’s growth. This, she said was then attributed to strong agricultural production earlier in the year.
“But that growth is not high enough to lift the per capita growth into positive territory. For some time, we have been emphasising on a comprehensive package to lift growth. One element of that would have to be stronger non-oil revenue mobilisation as Nigeria has one of the lowest rates of revenue in the world which was hit hard by the drop in oil prices.
“That is essential for the country to be able to spend more on priorities such as social safety and infrastructure,” Celasun added.
She said IMF was in support of the ongoing tight monetary policy stance adopted by the Central Bank of Nigeria (CBN) in the past few years.
“Other areas are the need for tight monetary policy and simpler unified exchange rate system. Foreign exchange restrictions have also been distorting public and private sector decisions and holding back investments.
“More generally, strengthening the banking system resilience and continued stronger structural reforms, especially in infrastructure and power sector and broader governance remains critical,” she added.
Celasun said the continental deal would enhance trade, lower tariff barriers and help in creating new opportunities for growth.
“In the long term, we would expect that if its implementation progresses fast we would expect positive impact on the continent. Given the demographics of Africa, many jobs will have to be created and also considering the young population,” she said.