Nigeria’s economy will expand at the slowest rate in 2021, when compared to other major Emerging Markets (EM) and developing economies, according to International Monetary Fund (IMF) forecasts.
The IMF in its most recent World Economic Outlook Update released last week, said it expects the Nigerian economy to grow by 1.5 percent in 2021.
This compares with South Africa which it expects to expand by 2.8 percent, Saudi Arabia 2.6 percent, Mexico 4.3 percent, Brazil 3.6 percent, Russia 3 percent, India 11.5 percent and China 8.1 percent.
Nigeria has struggled to get its economy to achieve above trend growth rates closer to 6 percent per annum, not seen since 2014.
Africa’s largest economy’s trend GDP growth has declined from 8 percent between 2004 and 2008, to 6.5 percent between 2009 and 2013 and now just 2 percent between 2014 and 2019.
Economists say Nigeria must undertake more structural reforms to reduce its vulnerability to the oil boom bust cycle.
“Nigeria must be able to attract inflows and savings from the rest of the world to finance its developmental needs, amid an unprecedented surge in liquidity creation by global central banks,” according to Standard Chartered Africa economist Razia Khan.
Amid exceptional uncertainty, the global economy as a whole is projected to grow 5.5 percent in 2021 and 4.2 percent in 2022.
The 2021 forecast is revised up 0.3 percentage point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies.
The IMF notes that oil exporters and tourism-based economies within EM and developing economies face particularly difficult prospects considering the expected slow normalization of cross-border travel and the subdued outlook for oil prices.
The IMF forecasts that the pandemic is expected to reverse the progress made in poverty reduction across the past two decades.
“Close to 90 million people are likely to fall below the extreme poverty threshold during 2020–21,” the IMF said.
“Across regions, vulnerabilities, economic structure, and pre-crisis growth trends, together with the severity of the pandemic and the size of the policy response to combat the fallout, shape recovery profiles.”