The International Monetary Fund (IMF) has said that despite its reversal of Nigeria’s growth forecast, a positive oil price outlook will support the country’s challenging economy in 2019.
The development is still reaffirming Nigeria’s dependence on the performance of hydrocarbon, despite seeming an improvement in non-oil exports and acclaimed diversification efforts.
The global institution, in its July World Economic Outlook, said sub-Saharan Africa, including Nigeria and other oil-exporting countries, will lose 0.1 percent growth to 3.4 percent in 2019 and 3.6 percent in 2020, when compared with its April forecast.
However, the fortunes of the sub-Saharan countries will come from non-resource-intensive countries, which would partially offset the lackluster performance of the region’s largest economies.
Growth in South Africa is expected to be more subdued in 2019 than projected in the April, following a very weak first quarter, reflecting a larger-than-anticipated impact of strike activity and energy supply issues in mining and weak agricultural production.
Global growth is projected at 3.2 per cent for 2019, improving to 3.5 per cent in 2020, but 0.1 percentage point lower for both years compared with the April 2019 forecast.
The projected pickup in global growth in 2020 relies importantly on several factors, like financial market sentiment staying generally supportive; continued fading of temporary drags, notably in the euro area; and stabilisation in some stressed emerging market economies, such as Argentina and Turkey.
Others include avoiding even sharper collapses in others, such as Iran and Venezuela, as 70 per cent of the increase in the global growth forecast for 2020 relative to 2019, is accounted for by projected recovery in challenged economies.
However, these factors, according to IMF, rely on a conducive global policy backdrop that ensures the dovish tilt of central banks and the buildup of policy stimulus in China that are not blunted by escalating trade tensions or Brexit disorder.
