IMF ups Nigeria’s 2022 growth forecast to 3.4% on positive oil

BY ONOME AMUGE

The International Monetary Fund (IMF) has projected a 3.4 percent growth rate for Nigeria’s economy in the year 2022, up from 2.7 percent, its previous growth estimate for Africa’s largest economy, underpinned by the significant increase in oil prices, a major export commodity of the country.

The international financial institution made the forecast in its recently released World Economic Outlook (WEO) at the ongoing hybrid spring meetings held in partnership with the World Bank, in Washington DC, U.S.

According to the IMF, the increase in oil prices lifted growth prospects for oil exporters in sub-Saharan Africa, such as Nigeria, with overall growth in the region projected to hit 3.8 percent in 2022.

Despite the positive projection, the IMF noted that food prices, which are at their highest valuations, will hurt consumers’ purchasing power particularly among low-income households where food prices account for a larger share of consumer expenses and consequently weigh on domestic demand.

It added that social and political turmoil, most notably in West Africa, would hurt the region’s economic growth.

On a global outlook, the IMF, which dwelled on the implication of the costly humanitarian crisis and economic damage from the Russian war on Ukraine, predicted a decline in the global growth projection from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023.

The IMF projected further that Russia’s economy would fall by 8.5 percent in 2022, while Ukraine’s economy is expected to shrink by 35 percent in the period under review.

“War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies,1.8 and 2.8 percentage points higher than projected last January,” the report read.

Beyond 2023, the IMF predicted a 3.3 percent decline in global growth over the medium term, noting that multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential towards ensuring a steady rise in global growth.