Despite Rising Inflation, Forex Woes, IMF Maintains 3.4% GDP Outlook For Nigeria

The International Monetary Fund has maintained a 3.4 per cent Gross Domestic Product growth rate for Nigeria despite inflationary pressure, naira depreciation and the power sector crisis.

The Washington based institution said in its World Economic Outlook released on Tuesday that Nigeria’s economy will maintain same growth trajectory of 3.4 per cent in 2022, held previously during last review in April.

IMF had in January 2022 predicted a growth rate of 2.7 per cent for Nigeria in 2022.

But the multilateral lender reviewed the 2023 growth rate downwards to 3.2 per cent.

IMF said global recovery looks “gloomy and more uncertain”, hence the baseline forecast is a slow growth from 6.1 per cent in 2021 to 3.2 percent in 2022.

This reflects a 0.4 percentage point lower in the April 2022 World Economic Outlook

The IMF admitted that several shocks including inflation have hit a world economy which was weakened already by the pandemic.

The lender said it is “triggering tighter financial conditions; a worse-than-anticipated slowdown in China, reflecting COVID- 19 outbreaks and lockdowns; and further negative spillovers from the war in Ukraine.”

In Nigeria, the Central Bank has raised interest rates from 13 per cent to 14 per cent, while the European Central Bank also hiked rates to 0.50 per cent and 0.75 per cent.

The CBN Governor, Godwin Emefiele, in the last Monetary Committee Meeting said available data on key macroeconomic variables indicate the likelihood of a subdued output growth for the Nigerian economy in 2022.

The Washington lender said in the outlook that the US alongside big economies will experience slower growth.

The IMF revealed, “Baseline growth in the United States is revised down by 1.4 percentage points and 1.3 percentage points in 2022 and 2023, respectively, reflecting weaker-than-expected growth in the first two quarters of 2022.

“Growth in the Euro area is also revised down: by 0.2 percentage point in 2022, when improved prospects for tourism and industrial activity in Italy are more than offset by significant downgrades in France, Germany, and Spain; and by 1.1 percentage point in 2023.

IMF said this would reflect the spillovers from the war in Ukraine as well as the assumption of tighter financial conditions.

“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,” IMF said.