IMF has projected a 0.8 per cent growth for Nigeria in 2017 implying that the country will be out of recession this year. The 2017 growth forecast for Nigeria at 0.8 per cent growth projection indicates that the rebound in domestic oil production volume and resilient growth in the agricultural sector, combined with a low base effect, will swing GDP numbers positive from perhaps the second quarter of 2017.
IMF marked up its global growth forecast for 2017 to 3.5 per cent from 3.4 per cent projected in the January World Economic Outlook WEO. Expectedly, the Fund revised its growth forecast for the Advanced Economies by 0.1 per cent to 2.0 per cent, also higher than the 2016 actual of 1.7 per cent with the US 2.3 per cent relative to 2016 actual of 1.6 per cent, UK 2.0 per cent relative to 2016 actual of 1.8 per cent and Japan 1.2 per cent relative to 1.0 per cent actual of 2016 being major drivers. 2017 Growth in the UK and Japan were reviewed upward by 0.5 and 0.4 percentage points respectively from January estimates.
On the other hand, Emerging and Developing economies 2017 growth projection was retained at 4.5 per cent higher than 4.1 per cent recorded in 2016 driven by a projected rebound in Russia, expected to grow 1.4 per cent in 2017 relative to a contraction of 0.2 per cent in 2016, faster growth in India and sustained momentum in China.
However, the IMF trimmed Sub-Saharan Africa’s growth projection by 20 basis points, citing that many of the largest non-resource-intensive countries in the region will find it increasingly hard to sustain growth through higher public capital spending in the face of rising public debt. The region is still expected to grow by 2.6 per cent in 2017 from 1.4 per cent in 2016, driven by rebound in activity of large economies in the region including Nigeria, South Africa and Angola. Nigeria is forecast to grow 0.8 per cent relative to a 1.5 per cent contraction in 2016 while South Africa is also expected to grow 0.8 per cent, faster than 0.3 per cent actual in 2016.
The 2017 IMF, World Bank Group Spring Meetings is coming at a time the global economy is being viewed to be in a sweet spot following respite in global downside risks related to the US elections, Brexit uncertainty and concerns of slower growth in China. Underlying the renewed optimism across regions are expectations of expansionary fiscal policy in the US – which has resulted in a stronger dollar and bullish streak in US equities, stronger commodity prices and better than expected growth and policy support in china.
Whilst the IMF noted the aforementioned as growth drivers, the Fund also acknowledged risk factors which include: an inward shift towards protectionism, resulting in reduced trade and cross-border investment flows; faster than expected pace of rate hikes by the US Fed which could trigger a rapid tightening in global financial conditions with negative feedback on emerging and frontier economies exposed to capital flows; excessive risk taking stimulated by an aggressive rollback of financial regulations, increasing the likelihood of future financial crises; financial tightening in Emerging markets in view of the mounting vulnerabilities in China’s financial system and subsisting weak balance sheets in other EM economies; and geo-political tensions, terrorism as well as domestic political discords.
