IMF rules out Nigeria’s full economic recovery before 2022


Published February 9, 2021


Nike Popoola

Nigeria ’s recovery from the impact of the COVID -19 is expected to be weak and gradual under current policies , the International Monetary Fund said on Monday .
The IMF also stated that the country ’s real Gross Domestic Product is expected to recover to its pre – pandemic level only in 2022 .
It stated in its report titled ‘ IMF executive board concludes 2020 Article IV consultation with Nigeria’ that real GDP growth in 2021 was expected to turn positive at 1 .5 per cent .
It stated , “ Nigeria ’s recovery is expected to be weak and gradual under current policies . Real GDP growth in 2021 is expected to turn positive at 1 . 5 per cent . Real GDP is expected to recover to its pre – pandemic level only in 2022 . ”
The IMF stated that the near -term outlook was subject to downside risks from pandemic -related developments with Nigeria experiencing a second wave.
Over the medium term , subdued global recovery and decarbonisation trends were expected to keep oil prices low , it stated .
The IMF said non -oil growth was also expected to remain sluggish , reflecting inward -looking policies and regulatory uncertainties .
Part of the report read, “ The COVID -19 pandemic has placed Nigeria at a critical juncture .
“ The country entered the crisis with falling per capita income, high inflation, and governance challenges .
“ Policy adjustments and reforms designed to shift the country from its dependence on oil and to diversify the economy toward private sector- led growth will set Nigeria on a more sustainable path to recovery .”
It noted that Nigeria ’s economy had been hit hard by the COVID -19 pandemic.
Following a sharp drop in oil prices and capital outflows , real GDP was estimated to have contracted by 3 . 2 per cent in 2020 amidst the pandemic -related lockdown .
Headline inflation rose to 14 .9 per cent in November 2020 , a 33 -month high, reflecting core and food inflation increases emanating from supply shortages due to the lockdown effected to curb infections alongside , the land -border closure and continued import restrictions .
The unemployment rate reached 27 per cent in the second quarter of 2020 , with youth unemployment at 41 per cent .
According to the report, the Nigerian authorities acted swiftly to adopt a pandemic- related support package equivalent to 0 .3 per cent of GDP in the 2020 revised federal budget despite limited fiscal space.
It stated , “ External vulnerabilities due to lower oil prices and weak global demand have increased , with the current account remaining in deficit in the first half of 2021 .
“ In April 2020 , Nigeria received IMF emergency financial assistance of $ 3 .5 bn under the Rapid Financing Instrument to help cushion the impact of the pandemic .”
The IMF said socioeconomic conditions had deteriorated , with rising food inflation, elevated youth unemployment , mass protests in October 2020 , and surveys show worsening food insecurity with a significant impact on the vulnerable

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