Key highlights:
- Nigeria’s growth remains stable at 3.2% for the year and 2.0% for 2023.
- Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7% in 2022 to 1.3% in 2023.
- Central banks need to remain steady with their tighter anti-inflation stance but also be ready to adjust and use their full set of policy instruments—including addressing financial stability.
The International Monetary Fund, IMF, revealed that the baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024.
IMF disclosed this in its World Economic Outlook update for April, . Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023.
Sub-Saharan forecasts stay moderate at 3.6 per cent in 2023 before picking up to 4.2 per cent in 2024, with Nigeria maintaining 3.2 per cent in 2023 and 3.0 in 2024.
Global GDP
IMF stated that the baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024, they added:
- “Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a plausible alternative scenario with further financial sector stress, global growth declines to about 2.5 percent in 2023 with advanced economy growth falling below 1 percent.
- “Global headline inflation in the baseline is set to fall from 8.7 percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices but underlying (core) inflation is likely to decline more slowly. Inflation’s return to target is unlikely before 2025 in most cases.
IMF warned that the natural rate of interest is important for both monetary and fiscal policy as it is a reference level to gauge the stance of monetary policy and a key determinant of the sustainability of public debt.
Risks
They added that the Risks to the outlook are heavily skewed to the downside, with the chances of a hard landing has risen sharply.
- “Financial sector stress could amplify and contagion could take hold, weakening the real economy through a sharp deterioration in financing conditions and compelling central banks to reconsider their policy paths.
- “Pockets of sovereign debt distress could, in the context of higher borrowing costs and lower growth, spread and become more systemic. The war in Ukraine could intensify and lead to more food and energy price spikes, pushing inflation up.
- “ Core inflation could turn out more persistent than anticipated, requiring even more monetary tightening to tame. Fragmentation into geopolitical blocs has the scope to generate large output losses, including through its effects on foreign direct investment
They urged Policymakers to have a narrow path to walk to improve prospects and minimize risks, adding that Central banks need to remain steady with their tighter anti-inflation stance, but also be ready to adjust and use their full set of policy instruments including addressing financial stability concerns as developments demand.
For sub-Saharan Africa, Nigeria’s growth remains stable at 3.2% for the year and 2.0% for 2023, with South Africa coming in worse at 0.1% and 1.8% respectively.
Backstory
Recall Nairametrics reported in January that International Monetary Fund (IMF) revised its 2023 growth projection for Nigeria’s economy to 3.2% from an earlier projected 3.1%.
The IMF also revealed that the global growth outlook for 2023 was revised upwards by 0.2 percentage points to 2.9%. Sub- Sahara’s GDP growth was also reviewed to 3.8% in 2023.
