After a few quarters of negative growth that saw the death of businesses, the Nigerian economy has wriggled out of recession, this is according to the World Economics.
World Economics is a UK based organization which focuses on producing financial analysis, insight and data relating to questions of key importance to the world economy.
Nigeria’s “Market Growth Index grew to 58.5 in April as the monthly Sales Growth Index ticked up to 56.7, its highest value since 2015 and representative of rapid growth”. Although the organization acknowledged that Price inflation for April, which is tracked by the Prices Charged Index, remained high at 58.7 – indicative of high levels of inflation, it added however that “a slowing trend has developed for the past 9 months”.
Whereas conditions remain difficult for businesses in the country, World Economics said, “The challenges and the recent changes to the Naira’s FX rate are aiding sales transactions. “Overall, conditions in Nigeria have improved further over the past month and managers are expressing renewed optimism that the economy will continue to grow and regain strength after the recession”, it added.
Similarly, the International Monetary Fund (IMF) has forecast 2.6 per cent growth for sub-Saharan Africa in 2017. It projected Nigeria’s economy to grow by 0.8 per cent this year, despite current economic realities, even as it also said the expected growth will be modest recovery in large economies led by Nigeria, South Africa and Angola.
“Output in Nigeria is projected to grow by 0.8 percent in 2017 as a result of a recovery in oil production,” so said IMF chief economist, IMF’s Maurice Obstfeld who unveiled the fund’s World Economic Outlook in Washington yesterday.
Pointing out sustained growth in the agricultural sector. IMF said, “In sub-Saharan Africa, a modest recovery is foreseen in 2017. Growth is projected to rise to 2.6 percent in 2017 and 3.5 percent in 2018, largely driven by specific factors in the largest economies, which faced challenging macroeconomic conditions in 2016.
“After contracting by 1.5 percent in 2016 because of disruptions in the oil sector coupled with foreign exchange, power, and fuel shortages, output in Nigeria is projected to grow by 0.8 percent in 2017 as a result of a recovery in oil production, continued growth in agriculture, and higher public investment”..
In the 2017 Global Financial Stability Report, the fund claimed that Momentum in the global economy has been building since the middle of last year. On the basis of this, the world body affirmed that earlier forecasts of higher global growth this year and next were feasible.
It also projected that the world economy might grow at a pace of 3.5 per cent up from 3.1 percent last year and 3.6 per cent in 2018.
Also, in its Global Financial Stability Report for 2017, it claimed that economic activity has gained momentum, amid broadly accommodative monetary and financial conditions which have spurred hopes for reflation. It said that this has given rise to longer term interest rates which, in turn, have helped to boost earnings of banks and insurance companies.
Remarkably, the fund insisted that gains in many asset prices reflect a more optimistic outlook. To retain such optimism, realize stronger growth and sustain the improvements in financial conditions, it urged policymakers to see the need to implement the right mix of policies, including a re-invigoration of economic risk taking, addressing domestic and external imbalances to enhance resilience in emerging market economies, and responding more proactively to long standing structural issues.
IMF also identified policy uncertainty as key in the downside risk posing new threats to financial stability from elevated political and policy uncertainty around the globe. On this, it warned that a shift toward protectionism in advanced countries could reduce global growth and trade, impede capital flows and dampen market sentiment.
The world body also said that a long period of low growth and low interest rates would challenge financial intermediation. The report cautioned that emerging market economies has been facing trying times in global markets, just as it commended them for a continued enhancement of their resilience by lowering corporate leverage and reducing external vulnerabilities.
In the same report, the IMF said that their growth was expected to continue improving, driven by gains for commodity exporters and prospects for positive growth spillovers from advanced countries.
