The International Monetary Fund (IMF) has predicted an estimated growth rate of 2.7 percent for Nigeria in 2022.
The institution made the forecast in its January World Economic Outlook, titled “Rising Caseloads, a Disrupted Recovery, and Higher Inflation” on Tuesday.
The growth projected is 0.1 percent higher than the 2.6 percent IMF’s forecast in October 2021.
IMF also emphasized that the global Gross Domestic Product growth is expected to reduce from 5.9 percent in 2021 to 4.4 percent in 2022.
According to it, the reversal is half a percentage point lower than what is predicted in the October WEO, adding that the global economy enters 2022 in a weaker position than previously expected.
It projects Sub-Saharan Africa’s growth to be 3.7 percent in 2022 and 4.0 percent in 2023, while Nigeria’s economy is expected to grow by 2.7 percent in 2022 and 2023.
“As the new Omicron COVID-19 variant spreads, countries have reimposed mobility restrictions. Rising energy prices and supply disruptions have resulted in higher and more broad-based inflation than anticipated, notably in the United States and many emerging markets and developing economies”.
“The ongoing retrenchment of China’s real estate sector and slower-than-expected recovery of private consumption also have limited growth prospects.”
The report also said that global growth was expected to slow to 3.8 percent in 2023. According to the IMF, although this is 0.2 percentage points higher than in the previous forecast, the upgrade largely reflects a mechanical pickup after current drags on growth dissipate in the second half of 2022.
The forecast is conditional on adverse health outcomes declining to low levels in most countries by the end-2022, assuming vaccination rates improve worldwide and therapies become more effective.
It also said that the emergence of a new variant was not the only risk that had crystallized in recent months, but that inflation continued to rise throughout the second half of 2021, driven by several factors of varying importance across regions.
“Fossil fuel prices have almost doubled in the past year, driving up energy costs and causing higher inflation, most prominently in Europe”.
Gita Gopinath, IMF’s Chief Economist, said that at the national level, policies should remain tailored to country-specific circumstances including the extent of recovery, underlying inflationary pressures, and available policy space.
According to her, both fiscal and monetary policies will need to work in tandem to achieve economic goals. She also said that given the high level of uncertainty, policies must also remain agile and adapt to incoming economic data.
“With policy space diminished in many economies and strong recoveries underway in others, fiscal deficits in most countries are projected to shrink this year. “The fiscal priority should continue to be the health sector, and transfers, where needed, should be effectively targeted to the worst affected.
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