Tuesday, January 02, 2018 /10:42AM / FDC
The International Monetary Fund (IMF) has revised its projections for Nigeria’s growth to 2.1% from 1.9%.
According to the Fund, economic performance will be supported by improvements in the power sector and business environment. Short-term growth will be supported by higher oil prices and domestic production, increased foreign exchange (forex) liquidity and market deregulation. These will boost investor confidence, foreign direct inflows (FDI) and foreign portfolio inflows (FPI). Improvements in the power sector and business environment will also be positive for the private sector activity.
To ensure sustainable and inclusive growth, the IMF recommended a comprehensive set of policy measures. These include tax reforms, social safety programs, and investments in infrastructure.
Analysis & Outlook
The second half of 2018 will be politically driven. Thus, we expect there to be increased government spending in the run-up to the election. This will be favourable for growth. On the other hand, investors may adopt the wait and see approach due to political uncertainties.
Nigeria’s economy remains largely vulnerable to commodity shocks. Thus, lower oil prices, or a dip in domestic production due to militant activities will weigh on economic activity, and could possibly reverse current progress. Any delay in policy responses will also prove detrimental.
2. Transcript of IMF African Department Press Briefing, Comments on Nigeria
3. Multiple Indicator Cluster Survey 2016-17
4. Medium-Term Budget Frameworks in Selected Sub-Saharan African Countries
5. IMF Staff Concludes Visit to Nigeria; Economic Backdrop Remains Challenging Despite Signs of Relief
6. Matchmaking Finance and Infrastructure