The International Monetary Fund (IMF) on Friday said Nigeria’s output would recover to its pre-pandemic level in 2022.
The forecast according to the global financial body is part of the submition of an IMF staff team led by Jesmin Rahman after conducting a virtual mission from October 30 to November 17, 2020, in the context of the 2020 Article IV Consultation with Nigeria.
The body said the team concluded that under the current policies, the outlook in Nigeria was, however, challenging.
“Real GDP (Gross Domestic Product) is projected to contract by 3¼ per cent in 2020. The recovery is projected to start in 2021, with subdued growth of 1½ per cent and output recovering to its pre-pandemic level only in 2022.
“Despite an expected easing of food prices, inflation is projected to remain in double-digits and above the Central Bank of Nigeria’s target range, absent monetary policy reforms.”
IMF stated that following a significant decline in revenue collections from levels that were already among the lowest in the world, fiscal deficits were projected to remain elevated in the medium term.
It said there were significant downside risks to this near-term outlook arising from the uncertain course of the pandemic both globally and in Nigeria.
IMF observed that the COVID-19 global pandemic was exacting a heavy toll on the Nigerian economy, which was already experiencing falling per capita income and double-digit inflation, with limited buffers and structural bottlenecks.
“Low oil prices and sharp capital outflows have significantly increased balance of payments pressures and, together with the pandemic-related lockdown, have led to a large output contraction and increased unemployment.
“Supply shortages have pushed up headline inflation to a 30-month high,” the body commented.
It said real GDP was contracting, inflation was increasing, and external vulnerabilities remained large.
The financial icon said major policy adjustments embracing broad market reforms were needed to reverse the negative trend to positive.
It noted that the exchange rate and monetary policy reforms, increased revenue mobilisation and structural reforms would help to unlock Nigeria’s growth potential.