The International Monetary Fund, IMF, forecast that Nigeria’s economy is expected to grow by 2.7% in 2022 and also grow at the same rate for 2023, adding that it has reduced its global growth outlook for the year. The Global growth is expected to moderate from 5.9 in 2021 to 4.4 % in 2022.
The IMF disclosed this in its January World Economic Outlook (WEO), titled “Rising Caseloads, a Disrupted Recovery, and Higher Inflation” released in Washington on Tuesday.
They added that the reason for the reduced growth forecast is triggered by anticipated effects of mobility restrictions, border closures, and health impacts from the spread of the Omicron variant.
What the IMF said:
They added that the global economy will enter a weaker position in 2022 than previously expected.
“As the new Omicron COVID-19 variant spreads, countries have reimposed mobility restrictions. Rising energy prices and supply disruptions have resulted in higher and more broad-based inflation than anticipated, notably in the United States and many emerging markets and developing economies.
“The ongoing retrenchment of China’s real estate sector and slower-than-expected recovery of private consumption also have limited growth prospects,” they said.
They revealed that Global growth is expected to moderate from 5.9 in 2021 to 4.4 per cent in 2022, which is half a percentage point lower for 2022 than in the October World Economic Outlook (WEO), largely reflecting forecast markdowns in the two largest economies.
A revised assumption removing the ‘Build Back Better’ fiscal policy package from the baseline, earlier withdrawal of monetary accommodation, and continued supply shortages produced a downward 1.2 percentage-points revision for the United States.
While in China, they highlighted pandemic-induced disruptions related to the zero-tolerance COVID-19 policy and protracted financial stress among property developers have induced a 0.8 percentage-point downgrade.
By 2023, Global growth is expected to slow to 3.8%, adding that it is a 0.2 percentage point higher than in the previous forecast. The upgrade largely reflects a mechanical pickup after current drags on growth dissipate in the second half of 2022.
“The emergence of new COVID-19 variants could prolong the pandemic and induce renewed economic disruptions,” they said. Adding that supply chain disruptions, energy price volatility, and localized wage pressures mean uncertainty around inflation and policy paths is high.
They also urged that worldwide access to vaccines, tests, and treatments is essential to reduce the risk of further dangerous COVID-19 variants, citing it requires increased production of supplies, as well as better in-country delivery systems and fairer international distribution.
“Monetary policy in many countries will need to continue on a tightening path to curb inflation pressures, while fiscal policy—operating with more limited space than earlier in the pandemic—will need to prioritize health and social spending while focusing support on the worst affected.
They forecast that Nigeria is expected to grow by 2.7% for the year and also in 2023, while South Africa by 1.9% and 1.4%.
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Recall Nairametrics reported earlier that The World Bank forecast that Nigeria’s economy is expected to grow by 2.5% in 2022 and 2.8% by 2023, while Global growth is expected to decelerate from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.
Meanwhile, Nigeria’s Minister of Finance, Budget, and National Planning, Mrs Zainab Ahmed disclosed this during the public presentation and breakdown of the 2022 budget where she said the real GDP forecast for the year is expected to be 4.2% in 2022 and 3.3% by 2024.