The International Monetary Fund (IMF), has predicted that the Nigerian economy is expected grow by 1.9 per cent in 2018, up from 0.8 per cent in 2017, due largely to fewer disruptions in oil production.
Amine Mati, the IMF Senior Resident Representative in Nigeria gave the projection while presenting the “Fall 2018 Regional Economic Outlook for Sub-Saharan Africa’’ on Thursday in Abuja.
Mr Mati said that some pick-up in the non-oil economy was also responsible for the predicted growth rate.
According to him “The recovery is expected to contribute about 0.7 percentage points to the region’s average growth in 2018 and lift activity in Nigeria’s trading partners through stronger remittances, financial spillovers and import demand.’’
He also said that average growth for the region was expected to reach about 3.1 per cent in 2018, up from 2.7 per cent recorded last year.
The IMF representative also noted that recovery in sub-Saharan Africa was expected to continue amidst rising risks as growth momentum improved most notably for oil exporters, mainly in Nigeria, but remains subdued in South Africa.
He said that as the magnitude of capital flows to the region increased, the volatility also increased.
Mati however warned that further escalation of trade tensions could threaten recovery in the region, adding that if the tensions persist, it would have potential impact on Gross Domestic Product (GDP).
On the nation’s debt service burden, Mr Mati admitted that public debt was diverting more resources toward interests payments, adding that for Nigeria, though debt to GDP was quite low, more than 50 per cent of its revenue is nowbeing devoted to interest payments which he lamented was quite unhealthy for the country’s economy.
He also noted that raising the nation’s revenue was verycrucial to bridging the gap to ensure that revenue to GDP was sufficient to pay up and service the debt profitably.
The IMF representative also said that meeting the Sustainable Development Goals (SDGs would require stronger growth and more financing.
He said that policies that would enhance creation of about 20 million new jobs yearly in the region to meet the demand was needed as meeting the SDGs by 2030 would be dependent on that.
He argued that job creation was complicated by uncertainty on the extent to which technology replaces labour.
Meanwhile, Nnanna Okwu, the Deputy Governor, Economic Policy, Central Bank of Nigeria (CBN), said capital inflows into Nigeria responds to both domestic and external shocks.
Represented by Friday Ogwuche, also of the CBN, he said Foreign Direct Investments (FDIs), inflows were becoming more diversified in response to the changing structure of the Nigerian economy. He said that there were certain factors shaping capital inflow behaviour in recent times, adding that high oil prices and growth in external reserves provides confidence for capital inflows into the country.
Mr Okwu also said that tepid recovery from recession and relatively stable macroeconomic environment provided impetus for capital inflows back to Nigeria between 2017 and 2018.
“Also, uncertain political environment as a result of the 2019 general elections is a source of concern for foreign investors and may have influenced capital reversal in recent months,” he also said.