The International Monetary Fund (IMF) yesterday said that Nigerian’s economy will grow by 1.9 per cent, while that of Sub-Saharan Africa (SSA) and the world would rise by 3.4 per cent and 3.7 per cent respectively.
The Division Chief research Department of IMF, Oya Calesun, said while explaining the World Economic Outlook (WEO) released at the ongoing IMF/World Bank Annual meetings in Washington DC, that Nigeria’s growth this year was projected at 0.8 per cent, due to recovering oil production, as well as improved output in the agricultural sector, which was majorly achieved through the Central Bank of Nigeria (CBN’s) Anchor Borrowers’ Programme.
The economy grew by 0.55 per cent in the second quarter of 2017, which helped the country to exit recession and this was partly influenced by growth in agriculture production.
However, the IMF cautioned that Nigeria’s economic growth remains fragile. It reiterated that there are still concerns about policy implementation, market segmentation in the foreign exchange (forex) market that remained dependent on the CBN interventions (despite initial steps to liberalise the foreign exchange market).
“We see significant amount of heterogeneity. What we see in the headline numbers, a pickup in growth this year, which is largely driven by the larger economies – Nigeria, Angola and South Africa.
In particular, in the case of Nigeria, stronger oil output and the dissipating problems in the Niger Delta and better agricultural production are playing positive roles in driving growth,” Calesun said while responding to a question on the Nigerian economy. “Again, it is not a very strong growth.
That is not to say a number of economies are not growing stronger. But there are still risks.
“Nigeria is expected to emerge from the 2016 recession caused by low oil prices and the disruption of oil production. On May 25, 2017, OPEC agreed to extend to March 2018 the production agreement in place since January this year.
The agreement entails a cut of 1.2 million barrels a day (mbd) from October 2016 production. Russia and other non-OPEC countries agreed to stick to current production, implying additional cuts of about 0.6 mbd from the October 2016 level (bringing the total cuts to 1.8 mbd).”
Furthermore, the Fund noted that notwithstanding efforts by the oil exporters participating in the production agreement, oil prices had fallen to less than $44 a barrel by late June, the lowest since November 2016, right before the initial production cuts were announced.
“The main drivers were stronger-than-expected US shale production and stronger-than-expected production recovery in Libya and Nigeria, which are exempt from production cuts. In addition, exports from OPEC countries appeared to be sustained at relatively high levels, even with lower production,” the Fund added.