Nigerian Economy Recovering from Historic Downturn –IMF
The Nigerian economy is recovering from a historic downturn benefiting from government policy support, rising oil prices and international financial assistance, the International Monetary Fund said in a statement on Friday.
According to IMF, the authorities’ proactive approach has contained the COVID-19 infection rates and fatalities, saying Nigeria is likely to grow by 2.6% this year in a “subdued” recovery from last year’s recession.
The fund, which had said it was likely to revise up its 1.5% growth projection for 2021, said the pace of recovery was still limited, given Nigeria’s rising population.
“This is just above the population growth rate, implying stagnant per capita income in the medium term,” it said.
The IMF, in a statement following a mission to Africa’s largest economy, also repeated its long-running calls to scrap costly fuel and electricity subsidies and said some reforms were needed as soon as possible.
Nigeria’s economy expanded 4.03% in the third quarter, the National Bureau of Statistics (NBS) said earlier this week, the fourth consecutive quarter of growth.
With the emergence of fuel subsidies and slow progress on revenue mobilization, the fiscal outlook faces significant risks, IMF said. It also noted that continued reliance on administrative measures to address persistent foreign exchange shortages is negatively impacting confidence.
“Without urgent fiscal and exchange rate reforms, the medium-term outlook faces sub-par growth”, it said. The economy is recovering from a historic downturn. The recovery is noted to be helped by government policy support, rebounding oil prices and international financial aid, Nigeria exited the recession in Q4-2020, earlier than expected.
Output rose by 5.4 per cent year on year in the second quarter, mainly reflecting base effects from transport and trade sectors and continued strong growth in the IT sector. However, manufacturing and oil sectors remain weak, reflecting continued foreign exchange shortages, and security and technical challenges.
Headline inflation rose sharply during the pandemic reaching a peak of 18.2 per cent year on year in March 2021 but has since declined helped by the new harvest season and opening of the land borders.
Reported unemployment rates are yet to come down although COVID-19 monthly surveys show the employment level to be back at its pre-pandemic level.
The COVID-19 pandemic has been well managed but there is a lasting imprint on the vulnerable, the multilateral lender stated, adding that as much of the rest of Sub-Saharan Africa (SSA), Nigeria underwent a third wave of the pandemic in August 2021.
IMF said the authorities’ proactive actions, including a robust infection tracking system and a national strategy for vaccine procurement and rollout, have helped keep infection rates and fatalities lower than in many other countries.
The economic and social impacts of the pandemic have been more daunting with rising food insecurity and an increase in the already-high levels of poverty.
Significant progress has been made in vaccine procurement. However, less than 3 per cent of the eligible population has been fully vaccinated reflecting limited vaccine supply, delivery bottlenecks and high vaccine hesitancy. #Nigerian Economy Recovering from Historic Downturn –IMF