IMF reduces Nigeria’s growth to 0.8%, surging $27b reserves support forecast
Few days after the World Bank Group said the country would grow by one per cent in 2017, the International Monetary Fund (IMF) has reduced the growth rate to 0.8 per cent.
The differing numbers shows the continuous changes in economic activities, which are used in measuring growth, as well as an affirmation that each forecast is not the end.
Nigeria’s growth rebound would be better than that of South Africa, projected at 0.8 per cent in 2017 and 1.6 per cent in 2018, while the sub-Saharan African economy, led by Nigeria, would record 2.8 per cent and 3.7 per cent for 2017 and 2018 respectively.
The gradual gains in the foreign exchange reserves may have improved Nigeria’s outlook, as the steady price of crude oil add up the number to $26.96 billion yesterday.
The new record represents eight-month record high, as it added no less than $600 million in the last seven trading days.
In the last three months, the nation’s foreign exchange reserves have been on the ascendancy, raising the hopes for calm forex market activities in 2017, and currently influencing growth projections.
Specifically, in the last three weeks, the reserves have added about $1.2 billion, defying mounting pressure from demand and series of interventions through special auctions by the regulator in the last three months.
Three weeks ago, it gained $320 million, followed by a $420 million gain in the second week and now a gain of $440 million.
An economist with Ecobank Nigeria, Kunle Ezun, said the take away from both forecasts is that the country’s recession would be over this year, as it is currently in the positive area.
The projections, he said, are also raising a new hopes that it is not over for Nigeria, because getting out of recession is a progress, adding the variations show that economic forecast is not a straight jacket thing, but influenced by activities and expectations.
“We can either increase or drop in the next forecast, but we must know that the solution to our economic challenges will not be fully realized this year, but a movement towards it.