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IMF downgrades Nigeria’s 2020 GDP growth projection, forecasts 5.4% contraction in economy

IMF considers Nigeria’s request to borrow $3.4bn

The International Monetary Fund (IMF) has lowered Nigeria’s Gross Domestic Product (GDP) growth forecast for 2020, saying it envisages that the economy will contract by 5.4%.

In April, the Fund had predicted that the GDP would shrink by 3.4% this year in view of the sweeping impact of the coronavirus pandemic and the oil crash on Africa’s largest economy.

The multilateral lender made the declaration in its World Economic Outlook for June titled “A Crisis like no Other, an Uncertain Recovery,” released on Wednesday.

‘Global growth is projected at –4.9 per cent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook forecast.

“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the document read in part.

It projected that, for the first time, all regions would see negative growth in 2020.

There would be significant variations in individual economies nevertheless, the report added, demonstrating the development of the pandemic and the effectiveness of preventive measures, differences in economic structures, dependence on external financial flows as well as remittances, and growth patterns in pre-crisis period.

Read also: To attain SDGs Nigeria needs to spend 18% of GDP on infrastructure –IMF

“In China, where the recovery from the sharp contraction in the first quarter is underway, growth is projected at 1.0 per cent in 2020, supported in part by policy stimulus.

“India’s economy is projected to contract by 4.5 per cent following a longer period of lockdown and slower recovery than anticipated in April,” the report said.

The economies of Brazil and Mexico, the two biggest economies in Latin America, which is one of the regions with the highest cases of the virus, are expected to shrink by 9.1% and 10.5% respectively.

“The disruptions due to the pandemic, as well as significantly lower disposable income for oil exporters after the dramatic fuel price decline, imply sharp recessions in Russia (–6.6 per cent), Saudi Arabia (–6.8 per cent), and Nigeria (–5.4 per cent), while South Africa’s performance (–8.0 per cent) will be severely affected by the health crisis,” IMF said in the outlook.

The Fund raised its global forecast for 2021 from the 0.2% projected earlier to 2.6%.

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