IMF upgrades Nigeria’s 2022 growth to 2.6%

The International Monetary Fund (IMF) has upgraded Nigeria’s growth for 2022 to 2.6 per cent from the April 2021 projection of 2.3 per cent as it projected a 4.9 per cent global growth leaving the 2021 growth projections unchanged in its July 2021 World Economic Outlook (WEO).

It also projected the global economy to grow by 6.0 per cent in 2021 while the Nigerian economy is projected to grow at 2.5 per cent this year.

Although the 2021 forecast is unchanged from April, the IMF said, “there are offsetting revisions across advanced economies and emerging market and developing economies reflecting differences in pandemic developments and policy shifts.

“The 0.5 percentage point upward revision for 2022 largely reflects anticipated additional fiscal support in the United States, with associated spill over to the global economy.

“In low income developing countries, the overall fiscal deficit in 2021 was revised up by 0.3 percentage points from the April 2021 WEO, mainly because of the re-emergence of fuel subsidies as well as the additional COVID-19 and security related support in Nigeria.

“Still, at 5.2 per cent of GDP, the overall fiscal deficit remains well below that of advanced and emerging market economies, reflecting financing constraints — about 60 per cent of LIDCs are assessed to be at high risk of or in debt distress. The public debt-to-GDP ratio for 2021 is projected at 48.5 per cent.

“In emerging market economies, the projected fiscal deficit for 2021 is 7.1 per cent of GDP, 0.5 percentage point smaller than in the April 2021 WEO. For some countries, the deficit has been lowered based on fiscal outturns in the first part of the year or growth revisions (China, South Africa).

“In others, additional fiscal measures have been proposed to mitigate the economic consequences of recurring infection waves (Brazil, India). Government debt is projected to rise to 65.1 per cent in 2021, primarily due to China.

“Interest rate hikes in some countries to prevent inflation will likely lead to less fiscal policy space to support the economy. Policies should be embedded in medium-term fiscal frameworks.

“Those with depleted space and increased fiscal risk should give added weight to preventing disruptive debt dynamics. Countries with credible fiscal rules may be able to pursue more gradual adjustments.”