The International Monetary Fund (IMF) on Wednesday cut down its 2018 economic growth projection for Nigeria to 1.9%, from the 2.1% it earlier forecast for the country in 2018. The Bretton Wood institution cited poor state of the Nigerian economy, as the reason for the reduction.
This was made known by the Deputy Director of the Research Department at IMF, Gian Maria Milesi-Ferreti, who spoke at the annual meeting of the International Monetary Fund and World Bank Group in Bali, Indonesia. He said the three largest economies on the African continent (Nigeria, South Africa and Angola) are holding down the aggregate growth rate for the entire continent. He said,
”The AGGREGATE growth rate for the continent is held down by the fact that the three largest economies are not performing up to their full potential.”
According to him,
“Nigeria’s growth, 1.9% this year; 2.3% next year. South Africa, only 0.8% this year. Angola, contracting by 0.1% this year. So, the aggregate – over 3% this year, close to 4% this year – is despite despite the largest economies in the continent doing poorly. The continent could do much better once these economies are on a more solid footing, particularly South Africa and Nigeria because they are really large and affect a number of countries in their neighbourhood.”
IMF Earlier Forecast
The Bretton Wood Institution had earlier projected that the Nigerian economy would grow by 2.1% in 2018 and 2.3% in 2019, in its World Economic Outlook report released earlier in July. However, the IMF growth forecast for the Nigerian economy in 2018 has now been cut down to 1.9%, in the October edition of its World Economic Outlook report.
World Bank Also Cut Nigeria’s Growth
The World Bank only last week cut down its 2018 economic growth forecast for Nigeria to 2.7% from the 3.1% it earlier projected for the economy last April.
The Bretton Wood institution also cited the slow expansion in the three biggest economies for the weak pace of recovery on the sub-continent, after predicting earlier in April that Africa’s recovery would gather pace in 2018.
Nigerian economy is already shrinking
It will be recalled that Nairametrics had earlier published an article a few weeks ago, where it brought its readers’ attention to the struggling state of the Nigerian economy; after recovering from the economic recession in the second quarter of 2017.
The economy had initially posted post-recession economic recovery in the third and second quarter of 2017, before it began declining gradually in the first quarter of 2018 – when GDP fell to 1.95% representing a quarter on quarter decline of 7.58%. Since then, the Nigerian economy has been recording macro-economic indices which show that the economy is really on a decline.
Key sectors posting negative GDP growths
- The Oil sector posted a negative Real GDP growth for the first time since Q1 2017(when the economy was still in recession) by posting a declined growth of -3.95% in Q2 2018 from 14.77% recorded in the previous quarter of Q1 2018.
- Considering the fact that the oil sector is the life wire of the economy and almost single-handedly brought the economy out of recession with a GDP growth of 23.03% in Q2 2017; the quarter on quarter decline of 18.72% should be a worrisome development for the economy.
- The manufacturing sector’s real GDP also dropped to 0.68% in the second quarter of 2018 from 3.39% recorded in Q1 2018.
- This shows that the manufacturing sector contracted by 2.17% on a quarter on quarter basis.
- The decline in the exports and GDP of Manufacturing and Solid Minerals sectors is an ominous sign that the federal government’s diversification efforts are not yielding the needed results.
- Agricultural real GDP growth declined to 1.19% (lower than that of recession period) to record its lowest growth in several years, while the finance and insurance sector’s real GDP also slumped to 1.28% from 13.0% in Q1 2018.
