The International Monetary Fund (IMF) has maintained its growth outlook for Nigeria at flat 0.8 percent this year and 1.9 percent in 2018, just as it upgrades its earlier outlook for the global economy by 0.1 percent.
In its October World Economic Outlook released Tuesday, the IMF reaffirmed its July projection that Nigeria will see its economy grow by 0.8 percent this year, and firming to 1.9 percent in 2018, more than twice the growth expected in 2017.
The growth projection for Nigeria, however fall short of that of the global economy, which it puts at an estimate of 3.6 percent, slightly above its July 2017 forecast by 0.1 percent.
The latest outlook for Nigeria may have been tempered by its status as one of the energy exporters, which according to the Bretton Woods institution may continue to face challenges.
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The IMF said global recovery is continuing, and at a faster pace, and that the picture is very different from early last year, when the world economy faced faltering growth and financial market turbulence. To this end it sees an accelerating cyclical upswing boosting Europe, China, Japan, and the United States, as well as emerging Asia.
“The latest World Economic Outlook has therefore upgraded its global growth projections to 3.6 percent for this year and 3.7 percent for next—in both cases 0.1 percentage point above our previous forecasts, and well above 2016’s global growth rate of 3.2 percent, which was the lowest since the global financial crisis,” the IMF said.
The outlook noted that the upgrade owes to brighter prospects for the advanced economies, whereas for 2018’s positive revision, emerging market and developing economies play a relatively bigger role, adding that it expects sub-Saharan Africa, where growth in per capita incomes has on average stalled for the past two years, to improve overall in 2018.
It said the current global acceleration is also notable because it is broad-based—more so than at any time since the start of this decade.
“This breadth offers a global environment of opportunity for ambitious policies that will support growth and raise economic resilience in the future,” it said, urging policymakers to seize the moment despite warning that the recovery is still incomplete in important respects, and the window for action the current cyclical upswing offers will not be open forever.
Specifically, the outlook noted that the recovery is incomplete within countries; saying that even as output nears potential in advanced economies, nominal and real wage growth have remained low. It added that the resulting higher income and wealth inequalities have helped fuel political disenchantment and skepticism about the gains from globalization, putting recovery at risk.
Second, the recovery is incomplete across countries. While most of the world is sharing in the current upswing, emerging market and low-income commodity exporters, especially energy exporters, continue to face challenges, as do several countries experiencing civil or political unrest, mostly in the Middle East, North and sub-Saharan Africa, and Latin America.
“Many small states have been struggling. About a quarter of all countries saw negative per capita income growth in 2016, and despite the current upswing, nearly a fifth of them are projected to do the same in 2017.”
Finally, the recovery is incomplete over time. The cyclical upswing masks much more subdued longer-run trends of productivity and demographics, even correcting for the arithmetical effect of more slowly growing populations.
For advanced economies, per capita output growth is now projected to average only 1.4 percent a year during 2017–22 compared with 2.2 percent a year during 1996–2005.
Moreover, it projects that fully 43 emerging market and developing economies will grow even less in per capita terms than the advanced economies over the coming five years. These economies are diverging rather than converging, going against the more benign trend of declining inequality between countries due to rapid growth in dynamic emerging markets such as China and India.
It therefore said the gaps in the recovery challenge policymakers to action—action that should take place now, while times are good. Success requires a three-pronged approach in the context of completing and refining the important financial stability reforms undertaken since the global crisis, without weakening them.