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IMF projects -4.3% growth for Nigeria in 2020, assumes $41 a barrel for global oil prices

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By Audrey Lotechukwu

WED, OCT 14 2020-theG&BJournal-The International Monetary Fund (IMF) in its October 2020 World Economic Outlook published Tuesday said the global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April and forecast global growth at -4.4 percent in 2020, a less severe contraction than forecast in the June 2020 World Economic Outlook (WEO).

The IMF said the global growth revision reflects better-than anticipated second quarter GDP outturns, mostly in advanced economies, where activity began to improve sooner than expected after lockdowns were scaled back in May and June, as well as indicators of a stronger recovery in the third quarter.

Global growth is projected at 5.2 percent in 2021, a little lower than in the June 2020 WEO Update, reflecting the more moderate downturn projected for 2020 and consistent with expectations of persistent social distancing.

The IMF expects global growth to gradually slow to about 3.5 percent into the medium term in the medium term outlook, after the rebound in 2021.

‘’This implies only limited progress toward catching up to the path of economic activity for 2020–25 projected before the pandemic for both advanced and emerging market and developing economies.’’

It said the subdued outlook for medium-term growth comes with a significant projected increase in the stock of sovereign debt.

For Nigeria, the IMF projected a 4.3 per cent contraction in 2020, a steep contrast to the April forecast of 3.4 per cent. Nigeria is one of the major commodity exporters that have been very negatively impacted not just by the pandemic but by the drop in oil prices.

Speaking on Sub-Saharan Africa outlook, the IMF’s Economic Counsellor and Director of Research, Gita Gopinath noted the significant heterogeneity within the region.

‘’ You have, of course, countries that are commodity exporters that have been very negatively impacted not just by the pandemic but by the drop in oil prices. Nigeria is one such case. And then you have countries like South Africa, where you have had, again, a very big hit in terms of the pandemic and a collapse in activity because of the requirements of lockdowns. There is always a difference between countries that are more diversified, that seem to have better growth prospects than others’’

The revised global economic outlook for the region overall is -3 percent for 2020 and then [-]3.1 percent in 2021.

GOPINATH said IMF assumption for global oil prices until the end of 2020 and over 2021 ‘’will be about $41 a barrel, and then in 2021, it goes up to $46 a barrel.’’

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