IMF cuts Nigeria’s GDP growth projection for the second consecutive time

The International Monetary Fund (IMF) has cut Nigeria’s gross domestic product (GDP) projection for 2019 to 2% from the 2.3% it had predicted previously.

The fund made this known in its World Economic Outlook (WEO) update titled ‘A Weakening Global Expansion’ released on Monday in Davos, Switzerland.

This is the second consecutive time that the Bretton Wood institution would cut Nigeria’s GDP growth projection.

“Emerging market and developing economies have been tested by difficult external conditions over the past few months amid trade tensions, rising US interest rates, dollar appreciation, capital outflows, and volatile oil prices,” it said.

“In sub-Saharan Africa, growth is expected to pick up from 2.9 percent in 2018 to 3.5 percent in 2019, and 3.6 percent in 2020. For both years the projection is 0.3 percentage point lower than last October’s projection, as softening oil prices have caused downward revisions for Angola and Nigeria.

“The headline numbers for the region mask significant variation in performance, with over one-third of sub-Saharan economies expected to grow above 5 percent in 2019–20.”

The fund advised that subsidies should be better targeted while recurrent expenditures should be rationalised to preserve capital outlays.

“Fiscal policy should ensure debt ratios remain sustainable under the more challenging external financial conditions. Improving the targeting of subsidies and rationalizing recurrent expenditures can help preserve capital outlays needed to boost potential growth and social spending to enhance inclusion.”