IMF raises Nigeria’s 2021 growth forecast from 2.5% to 2.6%

The International Monetary Fund (IMF) says Nigeria’s economy will grow by 2.6 percent in 2021, up from 2.5 percent earlier projected. 

The Washington-based institution disclosed this on Tuesday in its World Economic Outlook (WEO) for October 2021 titled, “Recovery During a Pandemic: Health Concerns, Supply Disruptions, and Price Pressures”.

Last week, the World Bank raised Nigeria’s growth forecast from 1.8 to 2.4 percent — based on the strong support from the service sector.

For the year 2022, IMF also increased Nigeria’s growth prospect to 2.7 percent from 2.6 percent.

Despite the slight positive outlook for Nigeria, the IMF downgraded global growth projections for 2021 due to the COVID-19 Delta variant.

The global projection for 2021 was downgraded by 0.1 percentage points to 5.9 per cent, while the global growth forecast for 2022 remained unchanged at 4.9 per cent.

The IMF stated that supply chain disruptions negatively affected recovery in the advanced economies, while lack of access to COVID-19 vaccines held back prospects for the emerging economies.

According to Gita Gopinath, economic counsellor/director of research, IMF, risks to the economy had increased due to the Delta variant, with the pandemic disrupting supply chains and fuelling inflation.

“The momentum has weakened, hobbled by the pandemic. Fuelled by the highly transmissible Delta variant, the recorded global recovery continues but the COVID-19 death toll has risen close to five million and health risks abound, holding back a full return to normalcy,” she said.

“Pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries. Overall, risks to economic prospects have increased, and policy trade-offs have become more complex.” 

Gopinath added that the outlook for the low-income developing country group had darkened considerably due to worsening pandemic dynamics.

“Partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices. Pandemic-related disruptions to contact-intensive sectors have caused the labour market recovery to significantly lag the output recovery in most countries,” Gopinath added.