TUE. 31 JANUARY, 2023-theGBJournal| The International Monetary Fund (IMF) Monday hiked Nigeria’s growth forecast to 3.2% in 2023, citing measures put in place by the Federal Government to address insecurity issues in the oil sector.
It however projected Nigeria’s growth in 2024 down to 2.9%.
The forecast in its latest economic update, is in contrast to bleak forecast in October 2022 when the Fund projected a slowing to 3.0% for the economy amid rising inflation and interest rates numbers.
Meanwhile, the IMF revised global growth projection for the year to 2.9%, but warned that risks to the outlook remains tilted to the downside. The forecast is 0.2 percentage improvement from its October 2022 forecast.
It also revised its 2024 global growth projection down to 3.1%.
It said growth remain weak by historical standards, as fight against inflation and Russia’s war in Ukraine weigh on activity, but adds that negative growth in global GDP or global GDP per capita—which often happens when there is a global recession—is not expected.
”Nevertheless, global growth projected for 2023 and 2024 is below the historical (2000–19) annual average of 3.8 percent.”
According to the IMF, ”the forecast of low growth in 2023 reflects the rise in central bank rates to fight inflation–– especially in advanced economies––as well as the war in Ukraine.
The decline in growth in 2023 from 2022 is driven by advanced economies; in emerging market and developing economies, growth is estimated to have bottomed out in 2022. Growth is expected to pick up in China with the full reopening in 2023.
The expected pickup in 2024 in both groups of economies reflects gradual recovery from the effects of the war in Ukraine and subsiding inflation. Following the path of global demand, world trade growth is expected to decline in 2023 to 2.4 percent, despite an easing of supply bottlenecks, before rising to 3.4 percent in 2024.”
Pierre-Olivier Gourinchas is the Economic Counsellor and the Director of Research of the IMF, writing in a blog post said ”despite these headwinds, the outlook is less gloomy than in our October forecast, and could represent a turning point, with growth bottoming out and inflation declining.”
He noted that emerging market and developing economies have already bottomed out as a group, with growth expected to rise modestly to 4 percent and 4.2 percent this year and next.
The IMF said, in most economies, amid the cost-of-living crisis, the priority remains achieving sustained disinflation.
”With tighter monetary conditions and lower growth potentially affecting financial and debt stability, it is necessary to deploy macroprudential tools and strengthen debt restructuring frameworks.”
Accelerating COVID-19 vaccinations in China would safeguard the recovery, with positive cross-border spillovers. Fiscal support should be better targeted at those most affected by elevated food and energy prices, and broad-based fiscal relief measures should be withdrawn.
Stronger multilateral cooperation is essential to preserve the gains from the rules-based multilateral system and to mitigate climate change by limiting emissions and raising green investment.
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