The International Monetary Fund, IMF, has stated that Nigeria’s economy will probably contract in 2016, as energy shortages and the delayed budget weigh on output.
The IMF resident representative in Nigeria, Gene Leon, in an interview in Abuja, said: “I think there is a high likelihood that the year 2016 as a whole will be a contractionary year.”
While the economy should look better in second half of the year, growth will probably not “be sufficiently fast, sufficiently rapid to be able to negate the outcome of” the first and second quarters, he said.
Africa’s largest economy shrunk by 0.4 percent in the three months through March, the first contraction in more than a decade, as oil output and prices slumped and the approval of spending plans for 2016 were delayed.
A currency peg and foreign-exchange trading restrictions, which were removed last month after more than a year, led to shortages of goods from gasoline to milk and contributed to the contraction in the first quarter.
While conditions that impeded growth in the first half of the year, including shortages of power, fuel, and foreign exchange, as well as the higher price of dollars on the the parallel market, may have been reduced, they still weigh on the economy, Leon said.
The IMF cut its 2016 growth forecast for Nigeria to 2.3 percent in its April Regional Economic Outlook from 3.2 percent projected in February.
