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IMF expects global GDP to shrink by 4.9% in 2020

The IMF expects poorer nations dealing with the virus to have longer economic recoveries.

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Nigeria will enjoy foreign investments before December, IMF predicts, IMF, World Bank to hold meetings via conference call over Coronavirus epidemic,Covid-19: IMF pledges to assist low-income member countries, Nigeria gets $3.4 billion disbursement from IMF, interest rate 1%

The International Monetary Fund (IMF) has downgraded its projection for the world’s economy to 4.9%, which is more than 3% from its initial prediction in April. 

The IMF expects the global economy to grow by 5.4% in 2021 compared to 5.8% in its earlier forecasts. The latest forecast recorded in its report, was influenced by the larger than expected storms to global value chains due to the coronavirus pandemic, affecting global demand for goods and services. 

The IMF expects poorer nations dealing with the virus to have longer economic recoveries as lockdowns continue in the worst-hit to global GDP since the Great Depression. 

READ MORE: IMF signals further economic contraction, warns of unprecedented crisis

“With the relentless spread of the pandemic, prospects of long-lasting negative consequences for livelihoods, job security and inequality have grown more daunting,” IMF said in its revised World Economic Outlook. 

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The rebound of equity markets globally “appears disconnected from shifts in underlying economic prospects”. The fund expects reduced consumption due to larger than expected disruptions to domestic appetite for goods and services due to social distancing measures for COVID-19. 

IMF’s Chief Economist, Gita Gopinath said in last month that the global outlooks are worse than previously expected and the fund may downgrade its April forecasts based on data its computing. 

READ MORE: Emefiele unveils 5-year plan, targets double digit growth

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Fiscal Monetary Policies seem to have eased in first world nations and emerging economies. 

Globally, Central Banks have announced stimulus plans up to $11 trillion, which is $3 trillion higher than April estimates. These plans are expected to soften the effects on the declining economic activity and limited the rising borrowing costs, also emerging markets portfolios have seen a recovery from earlier withdrawals. 

The fund says the reduced global GDP could “tip some economies into debt crises and slow activity further”. 

The US GDP is set to take an 8% hit in 2020, compared to 5.9% earlier predicted,  2021 growth forecast is pegged at 4.5%. The Euro Area is expected to shrink by 10.2% in 2020 and grow 6% in 2021. 

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Emerging Markets are expected to shrink by 3% while advanced economies by 8%, compared to 6.1% previously predicted. 

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China will see a little growth as it’s expected to grow by just 1%. Brazil is expected to shrink 9.1%, Mexico by 10.5% and India by 4.5%. 

IMF warns that the reductions in GDP due to COVID-19 will widen inequality, with over 90% of emerging market economies expected to have per capita income declines. 

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Global trade for goods and services will also shrink by 11.9% this year. 

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The group expects 2 possible scenarios, first a possible second virus outbreak next year which will disrupt economic activity to about half the value expected for this year, emerging economies are expected to feel the heat more and global outlook will be 4.9% lower than 2021 forecasts. 

The other scenario predicts a faster than expected economic rebound with global forecasts 3% higher than 2021 expectations. 

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Economy & Politics

Uganda Elections: Museveni re-elected for 6th term with 58.6% of the votes

Uganda’s President Museveni has won a 6th term in office as the opposition alleges wide-scale rigging.

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The President of Uganda, Yoweri Museveni, has been re-elected as President, gathering 5.85 million votes compared to 3.48 million votes by main opposition leader, Robert Kyagulanyi, a.k.a Bobi Wine.

According to Reuters, this victory represents 58.6% of the vote cast while Bobi Wine got 34.8%

Bobi Wine announced that the election results show this is the most fraudulent election in the history of Uganda and urged his followers to reject the result.

What you should know

  • Yoweri Museveni, aged 76, has been President of the East African nation since 1986.
  • Bobi Wine claimed via his official Twitter handle that military men jumped over his fence and took control of his home yesterday.

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Economy & Politics

Okonjo-Iweala speaks on Twitter’s suspension of Donald Trump

Dr Ngozi Okonjo-Iweala has given her opinion on Twitter’s suspension of US President, Donald Trump.

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Ngozi Okonjo Iweala, World Bank, Davos, World Economic Forum, WTO accepts nomination of Okonjo-Iweala as DG despite opposition from Egypt,WTO:  Happy to be in final rounds of DG Campaign- Okonjo Iweala

Twitter board member and candidate for the DG of the WTO, Ngozi Okonjo-Iweala, has said Twitter has rules under which it operates and CEO Jack Dorsey’s statement contains all that needs to be known concerning the suspension of US President, Donald Trump from its platform.

Okonjo-Iweala disclosed this in an interview with Arise TV on Friday evening.

  • “Twitter tries to help the public conversation in the world and gives people a means to engage on important issues,” she said.

On the decision to censor Donald Trump

She said the Board agreed as a team to have one voice on the decision to suspend Donald Trump from the service and that CEO Jack Dorsey gave all that needed to be known.

Okonjo-Iweala stated;

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  • “Being on the Twitter board, I have to respect our rules for communications on what is happening. I have to be very honest that we as a board agreed that we have a team that will deal with this, to make sure that we have one voice. But, I can tell you that if you want to know why the decisions were taken, please look at the statement by the CEO, Jack Dorsey, I think it tells you all you want to know.
  • “Twitter is an organization that has rules under which it operates, and if you read what it puts out, you will see that things are being implemented according to the rules.

On welcoming rules and regulations for the social media giant

Okonjo-Iweala said;

  • “Let’s wait and see, I don’t want to pre-judge or comment on anything. I don’t want to go beyond what I am willing to say, but let’s wait and see. These are very difficult times in the world. We all saw what happened in the United States. We have to be very careful. We would see what the future would be for the tech companies.”

Flash back:

  • Nairametrics reported that social media network, Twitter, permanently suspended U.S President, Donald Trump, citing the risk of further incitement of violence.
  • Jack Dorsey, the CEO and founder of Twitter, said that the decision to ban Donald Trump from the social network was the right decision, but one that sets a dangerous precedent.

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Economy & Politics

2021 budget: Lagos to fund deficit of N192.49 billion with internal, external loans

Lagos to fund 2021 budget deficit of N192.494 billion by a combination of internal and external loans.

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Sanwo-Olu presents N1.1 trillion 2020 budget

The Lagos state government has disclosed that it will fund its 2021 budget deficit of N192.494 billion by a combination of internal and external loans.

This was disclosed by the State’s Commissioner for Economic Planning and Budget, Samuel Egube, while presenting the state’s budget for 2021 at a media round table session.

According to him, the total revenue estimate is N971.02 billion, consisting of internal generated revenue (IGR) of N723.81 billion; capital receipts (N71.81 billion); and federal transfer of N175.40 billion.

He said, “The Lagos 2021 budget is made up of N702.93 billion for capital expenditure and N460.49 billion for recurrent expenditure, implying 60:40 capital to recurrent ratio against 2020 budget which was at 55:45 capital to recurrent ratio.

“The breakdown of Lagos recurrent expenditure shows that total personnel cost (N168.72 billion); total overhead costs (N260.07 billion); and debt charges (N31.87 billion).”

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Also at the event, Commissioner for Finance, Rabiu Onalapo, stated that the state will local debt instrument through domestic bond issuance to fund the deficit in its 2021 budget.

He said, “The debts are totally tied to capital projects adding that the state’s 19.8% debt to revenue ratio is projected to rise to 22% in 2021.

“This remains below the World Bank and federal government’s benchmarks of 40% and 30% respectively.”

Key Highlights and Projects under the Budget

  • Roads and other infrastructure: A provision of N166.579 billion is provided for the construction and maintenance of roads and other infrastructure within the state.
  • Traffic Management/Transportation: A total of N93.745 billion was budgeted under the transportation family for Blue and Red rail lines, Junction improvement all around the state, Completion of trailer parks in the state and development of quality bus corridors amongst others.
  • Education: The sum of N146.935 billion was budgeted for the education sector. The figure is N10.835 billion higher than the 2020 provision of N136.100 billion.
  • Science and Technology: Sum of N23.50 billion is provided for the building and upgrading of IT infrastructure statewide. This consists of N17.131 billion for the Smart City Project. The balance of N6.371 billion is earmarked for the e-GIS Land automation system, single billing system and ease of tax payment/levels among others.

What you should know

Babajide Sanwo-Olu, governor of Lagos, signed the 2021 Appropriation Bill into law on December 31, 2020.

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This month, the Lagos State Government projected a monthly target of N60.318 billion Internally Generated Revenue (IGR) for the 2021 fiscal year.

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