IMF projects -4.3% contraction for Nigerian economy 2020

The International Monetary Fund (IMF) has given a forecast that the Nigerian economy will contrast by-4.3 per cent this year, reversing it from its earlier projection of -5.4 per cent.

The Washington-based multilateral lender revealed the grim prospect in its flagship World Economic Outlook for October 2020 report released on Tuesday.

It had said in April that Nigeria’s Gross Domestic Product (GDP) would shrink by 3.4 per cent in 2020.

IMF said Africa’s largest economy will find recovery in 2021, putting the economic growth rate for the year at 1.7 per cent.

Global growth is seen decelerating by 4.4 per cent in 2020 relative to the 5.2 per cent anticipated in its outlook released in June.

It noted that the revision demonstrated a stronger than expected performance of second quarter GDP outturns particularly in developed countries, where economic activity started to grow sooner than expected, following the lifting of lockdown curbs in May and June.

“Global growth is projected at 5.2 per cent in 2021, a little lower than in the June 2020 WEO Update, reflecting the more moderate downturn projected for 2020 and consistent with expectations of persistent social distancing.

“Following the contraction in 2020 and recovery in 2021, the level of global GDP in 2021 is expected to be a modest 0.6 per cent above that of 2019.

“The growth projections imply wide negative output gaps and elevated unemployment rates this year and in 2021 across both advanced and emerging market economies.

“After the rebound in 2021, global growth is expected to gradually slow to about 3.5 per cent into the medium term.”

The Fund disclosed that rapid response by central banks had tempered the weight of the pandemic damage to economic activity caused by lockdowns, and warned against the untimely removal of support measures.

“The considerable global fiscal support of close to $12tn and the extensive rate cuts, liquidity injections, and asset purchases by central banks helped save lives and livelihoods and prevented a financial catastrophe,” said Gita Gopinath, the IMF’s economic counsellor.