The International Monetary Fund has revised upwards its economic outlook for Nigeria from 0.2 per cent and 0.7 per cent growth for 2017 and 2018 to 0.8 per cent and 2.3 per cents respectively on increased oil production and improved security in the country.
The federal government had quelled the violence in the oil rich Niger Delta region, increasing the country’s oil output even. Also, stability and a rise in global oil price has favoured the country which now ears more from oil sales than it did last year.
The increased revenue has seen the country’s external reserves rise, giving the Central Bank of Nigeria the ability to pump dollar liquidity into the import dependent economy to shore up the value of the naira.
However the IMF said “for the countries hardest hit by the decline in commodity prices, the recent market firming provides some relief, but the adjustment to reestablish macroeconomic stability is urgent. This implies allowing the exchange rate to adjust in countries not relying on an exchange rate peg, tightening monetary policy where needed to tackle increases in inflation, and ensuring that needed fiscal consolidation is as growth-friendly as possible.
“The latter is particularly important in countries with pegs, where the exchange rate cannot act as a shock absorber. Over the longer term, countries highly dependent on one or a few commodity products should work to diversify their export bases.
The IMF in its World Economic Outlook for 2017, published yesterday said Emerging Markets and Developing Economies (EMDE) growth is currently estimated at 4.1 percent in 2016, and is projected to reach 4.5 percent for 2017, around 0.1 percentage point weaker than the October forecast. It foresees a further pickup in growth to 4.8 percent in 2018.
IMF in the outlook said emerging market and developing economies face starkly diverse cyclical positions and structural challenges, noting that enhancing financial resilience can reduce the vulnerability to a tightening of global financial conditions, sharp currency movements, and the risk of capital flow reversals.