The International Monetary Fund
(IMF) has affirmed Nigeria’s economy as the biggest on the African continent.
The multilateral organization’s Economic Outlook, puts Nigeria’s Gross Domestic
Product (GDP) at N314.73 billion in 2015 as against South Africa’s $280.36
billion.
In a report titled World Economic
Outlook October 2016: Subdued Demand, Symptoms and Remedies, the IMF put
Nigeria’s GDP at $415.08 billion, from $493.83 billion at the end of 2015.
Although Egypt’s 2016 data was
reported as unavailable, its 2015 size remained at N330.15 billion while that
of Algeria, one of the largest economies on the continent, was put at $168.31
billion.
“The picture for sub-Saharan Africa
is increasingly one of multispeed growth. While growth projections were revised
down substantially in the region, they mostly reflect challenging macroeconomic
conditions in its largest economies, which are adjusting to lower commodity
revenues, the report said.
In Nigeria, economic activity is now
projected to contract 1.7 percent in 2016, reflecting temporary
disruptions to oil production, foreign currency shortages resulting from lower
oil receipts, lower power generation, and weak investor confidence.The IMF
expects the Nigerian economy to grow by 0.6% in 2017, while global growth is
projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017.
According to the report,”while
growth in emerging Asia and especially India continues to be resilient, the
largest economies in sub-Saharan Africa (Nigeria, South Africa, Angola) are
experiencing sharp slowdowns or recessions as lower commodity prices interact
with difficult domestic political and economic conditions. Brazil and Russia
continue to face challenging macroeconomic conditions, but their outlook has
strengthened somewhat relative to last April.”
According to the IMF:”Activity
weakened in sub-Saharan Africa, led by Nigeria, where production was disrupted
by shortages of foreign exchange, militant activity in the Niger Delta, and
electricity blackouts. Momentum in South Africa was flat, despite the
improvements in the external environment—notably stabilisationin China.
Elsewhere, resilience in Côte d’Ivoire,Kenya, Senegal, and Tanzania partially
offset generally softer activity across the region.”
Beyond 2017, the IMF expects
global growth to be driven entirely by emerging market and developing economies.
This expectation is premised on the normalization of growth rates in countries
and regions under stress or growing well below potential in 2016–17 (such
as Nigeria, Russia, South Africa, Latin America,parts of the Middle East),
China maintaining its transition toward consumption- and services-based
growth,and continued resilience in other countries.
While blaming rising inflation on
the drastic changes in the exchange rates of countries like Nigeria, the IMF
says “
Policies in commodity-dependent countries
have been slow to adjust to the difficult economic conditions. After widening
sharply in 2015, current account deficits are expected to narrow slightly
in 2016, helped in part by exchange rate depreciation.
“But exchange rate depreciations
have also raised inflation for some (for example, Mozambique, Nigeria, and
Zambia) or increased external debt liabilities. Fiscal deficits are likely to
remain elevated through 2016 as weaker revenues offset cutbacks in
spending.
“Among diversified economies, fiscal
and external current account positions have not improved despite continued
strong economic growth, reflecting limited progress in adopting counter
cyclical policies—particularly with current spending outpacing revenue in some
cases.
Source:BusinessDay
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