The International Monetary Fund (IMF), on Tuesday, sliced its earlier 2022 growth forecast for Nigeria to 3.2 percent from the 3.4 percent it projected in June.
This downgrade is due to the prevailing impacts from global supply chain disruptions, which have driven up inflation substantially and raised fears of global recession as central banks tighten monetary policy to tame soaring food and energy prices.
The IMF said economic growth in Nigeria, Africa’s largest economy, could sink further to 3.0 percent in 2023.
In its World Economic Outlook (WEO) released in Washington at its ongoing 2022 joint Annual Meetings with the World Bank, the fund also cut global growth for the fourth time from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023.
This is the weakest global growth forecast since 2001, except for the global financial crisis and the acute phase of the COVID-19 pandemic, and it reflects significant slowdowns for the largest economies: a US GDP contraction in the first half of 2022, a euro area contraction in the second half of 2022, and prolonged COVID-19 outbreaks and lockdowns in China with a growing property sector crisis.
Sub-Saharan Africa is now expected to slow to 3.6 percent from 4.7 percent in 2021 and then could pick up to 3.7 percent in 2023.
The annual event – the first in-person in two years since COVID began – is being held at a time when the world is facing a double whammy of surging inflation and weak growth.
About a third of the world economy faces two consecutive quarters of negative growth, according to the IMF, with global inflation now forecast to rise from 4.7 percent in 2021 to as high as 8.8 percent in 2022. It could, however, decline to 6.5 percent in 2023 and further to 4.1 percent by 2024.
Upside inflation surprises have been most widespread among advanced economies, with greater variability in emerging market and developing economies, and the IMF warned that the risks to the outlook remained unusually large and to the downside.
Pierre-Olivier Gourinchas, director of research at the IMF, speaking at a media briefing on the WEO, said despite the slowdown, inflation pressures were proving broader and more persistent than anticipated. Global inflation is now expected to peak at 9.5 percent in the third quarter of 2022, before decelerating to 4.1 percent by 2024.
Inflation is also broadening beyond food and energy. Global core inflation rose from an annualised monthly rate of 4.2 percent at the end of 2021 to 6.7 percent in July for the mid-income countries, as downside risks remain elevated, and policy trade-offs are becoming acutely challenging.
The IMF believes that wading off these risks starts with global monetary policy staying the course of a tightening stance to restore price stability.
SOURCE: BUSINESSDAY
