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IMF paints grim picture for Nigeria’s economy

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8 years ago

July 12, 2016

IMF paints grim picture for Nigeria’s economy

The International Monetary Fund, IMF, has painted a further grim picture for the Nigerian economy, saying it will contract in 2016.

This, the fund said is a result of energy shortages, delayed budget, which it said weigh down on output.

This was stated by the IMF Country Representative in Nigeria, Gene Leon.

“I think there is a high likelihood that 2016 as a whole will be a contractionary year.”

According to Lean, though the economy should pick up in the second half of the year, it will not be fast enough to be able to cancel out the outcome of the first and second quarters.

It would be recalled that Nigeria’s Gross Domestic Product, GDP, shrunk by 0.4 per cent in the Q1 the first contraction in more than a decade. This was attributed to oil output and the slump in prices, and because approval of spending plans for 2016 was delayed.

The IMF country representative also said though some of the conditions that weigh down growth in the first half of the year has been removed,they are still impeding the economy.

Read also: Adeosun laments how Insurance sector deprives economy of 70,000 jobs yearly

He listed the conditions as fuel and power shortages, foreign exchange scarcity and higher price of dollars at the parallel market.

Leon said: “Most people would agree that if you should fix one thing in this country, it should be power. There is a need to start changing the power equation from 2016, from today, nottomorrow or later.”

He added that inflation, which will not exceed 20%, will continue it upward trend throughout the year, adding that: “the central bank’s Monetary Policy Committee may be open to tolerating a little more inflation if growth emerges as the priority, as opposed to choking inflation and squeezing the little life out of growth”.

The IMF, had in April, cut the 2016 growth forecast for Nigeria to 2.3 per cent from the 3.2 per cent it projected in February while the World lowered its forecast to 0.8 per cent in June becuase weakness from oil-output disruptions and low prices.

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