IMF Revises Nigeria’s 2021 GDP Forecast

The International Monetary Fund (IMF) has projected that the Nigerian economy will grow by 1.5 per cent in 2021.

This figure is slightly lower than the 1.7 per cent the fund had predicted for the country in its previous forecast.

The latest update was contained in IMF’s World Economic Outlook (WEO) titled: ‘Policy Support and Vaccines Expected to Lift Activity,’ and released on Tuesday.

The institution, however, predicted that in sub-Saharan Africa, growth will strengthen to 3.2 per cent in 2021 and 3.9 per cent in 2022.

The fund also expected oil prices to average above $50 per barrel in 2021, a more than 21 per cent rise from 2020’s depressed level on the back of the rollout of COVID-19 vaccines and fiscal stimulus programmes.

The IMF, in its WEO report, noted that the updated version of the report was reviewed in line with emergence of new variants of the coronavirus, which threaten the pace of global recovery.

“Although recent vaccine approvals have raised hopes of a turnaround in the pandemic later this year, renewed waves and new variants of the virus pose concerns for the outlook,” part of the report read.

“Amid exceptional uncertainty, the global economy is projected to grow 5.5 percent in 2021 and 4.2 percent in 2022.

“The 2021 forecast is revised up 0.3 percentage point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies.”

In its updated forecast, the IMF said it now expects global Gross Domestic Product (GDP) to grow 5.5 per cent in 2021, after a 3.5 per cent contraction in 2020, with the 2020 figure revised up 0.9 percentage point from the previous forecast issued in October while the 2021 estimate is a 0.3 percentage point upward revision.

S&P Global Platts quoted the IMF as forecasting that advanced economies are projected to recover more quickly than developing countries due to quicker access to vaccines and broader fiscal measures.

“Oil exporters and tourism-based economies face particularly difficult prospects given the subdued outlook for oil prices and expected slow normalisation of cross-border travel,” it said.

The IMF uses a simple average of prices of Brent, Dubai and WTI to calculate its oil prices. With that methodology, the IMF said oil prices averaged $41.29/b in 2020 and would rise to $50.03/b in 2021, before falling back to $48.82/b in 2022.

Speaking at the virtual release of the WEO report, Economic Counselor and Director of the Research Department, Ms. Gita Gopinath, urged low income and emerging economies to hasten COVID-19 vaccination.

She also called for more support to fund African countries’ purchase of vaccines.

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