The International Monetary Fund (IMF) has projected Nigeria’s Gross Domestic Product (GDP) growth of about 2.1 per cent in 2018 due largely to dependency on oil revenues.
The report by IMF pointed out that in the absence of new policies, the near-term outlook remains challenging for Africa’s power house. The IMF forecast is contradicting the federal government 3.5 per cent growth in GDP by next year.
The Federal Government’s economic agenda, fiscal policies, as well as projected incomes and expenditures for the period 2018-2020 had projected GDP at 3.5 per cent in 2018, while inflation is expected to moderate to 12.42 per cent.
Accordingly, the government explained that growth in the medium term is based on the assumptions of average oil production of 2.2mbpd, benchmark oil prices of $45 per barrel, and an average exchange of N305/dollar.“While Oil GDP is projected to record higher growth rate, the major driver of growth is the non-oil sector. The oil and gas sector is also expected to rebound as production stabilizes around 2.3mbpd, oil price (although lower than pre-June 2014 prices) gradually improves, and government’s successful transition from the traditional JV Cash Call budget to the self-funding mechanism,” the report by FG had explained.
The National Bureau of Statistics (NBS) had announced growth in Nigeria’s GDP from 0.71, reviewed for the second quarter, to 1.4 per cent as the price of oil, Nigeria’s mainstay, at the international market continued to rise, amidst the country’s stable production output helped by the sustained peace in the volatile Niger-Delta region.
The Managing Director, Financial Derivatives Company Ltd., Mr. Bismarck Rewane, predicted that Nigeria economic recovery next year will be slow, stressing that overall Gross Domestic Product (GDP) growth expected to average 2.2per cent in 2018.
The World Bank had said Nigerian economy was projected to grow at a modest one per cent in 2018, against Sub-Saharan Africa’s estimate of 3.2 per cent in 2018 and 3.5 per cent in 2019.
Reviewing Nigeria’s economy over the weekend, the IMF noted that despite the regional power climbing out of recession in the second quarter of 2017, its economic growth remains sluggish.
The IMF, in an email statement obtained by our correspondent was quick in linking this to what it regarded as a cycle of poverty that drives the nation’s yawning wealth inequality as well as social unrest.
According to IMF report, “Overall growth is slowly picking up but recovery remains challenging. Macroeconomic and structural reforms remain urgent to contain any vulnerability.” The IMF made broadly similar statements earlier this year, a sign that little progress had been made.
Earlier on Friday, the National Bureau of Statistics (NBS) office said that four in every 10 members of the country’s workforce were unemployed or underemployed at the end of September.
It added, “Much of Nigeria’s recovery since the second quarter has been driven by crude production, which accounts for roughly two-thirds of government revenues, despite the government’s assertions they are investing in infrastructure and key industries such as agriculture to drive employment and boost growth.”
IMF noted that Nigeria’s growth is expected to continue to pick up in 2018 to 2.1 per cent, helped by the full year impact of greater availability of foreign exchange and higher oil production, but to stay relatively flat in the medium term.
The global lender said this is due to low oil prices, security issues and a lack of policy all threaten the Nigeria’s economic recovery.
It however, noted that the Nigeria’s exchange rate still controlled by the government and its central bank, which they said remains a bugbear after more than a year of efforts to convince the administration to liberalise the currency.
“Moving toward a unified and market-based exchange rate as soon as possible while continuing to strengthen external buffers would be necessary to increase confidence and reduce potential risks from capital flow reversals”, the IMF said.