IMF cuts Nigeria’s 2020 growth forecast
At its just concluded Article IV Consultation to Nigeria, theIMF revised Nigeria’s 2020 growth forecast to 2% from a previous forecast of 2.5%. The downward revision is a reflection of the impact of the Coronavirus (Covid-19) outbreak on oil demand and prices. IMF recommended key policy reforms for Nigeria to adopt in the long term including the removal of forex restrictions, monetary policy tightening and adoption of a more flexible exchange rate. In the meantime, the Bankers Committee has agreed to collaborate with the FG to address the challenge of financing the country’s huge infrastructure deficit.
Is Nigeria ready for a health epidemic?
The recent outbreak of coronavirus offers an uncanny sense of déjà vu to the days of Ebola and SARS. The outbreak is not without its attendant consequences on global commodities and financial markets. The more integrated Nigeria is with the global markets, the higher the risk of the virus penetrating the economy. With the inclusion of Nigeria in the WHO’s ‘high risk’ African countries, the country must remain vigilant. This is also a call for the FGN to increase its investment in the health sector in order to build its resilience against global health shocks.
AfCFTA signed: Nigeria to benefit immensely from increased FDI
The National Income Identity is comprised of four key components– Consumption (C), Investment (I), Government Spending (G) and Net Exports (X-M). The investment component plays a crucial role in the equation and acts as a multiplier on which future GDP growth depends on. Sadly, Gross Capital Formation accounts for only 20% of Nigeria’s total output. The low level of investment brings to light Nigeria’s investment challenges, which include a huge infrastructure deficit and government policy uncertainties. These challenges must be addressed urgently if Nigeria is to benefit from the AfCFTA, which is scheduled to kick off in the near term.
In this edition of the FDC Bi-Monthly publication, the FDC Think-Tank analyzes the issues and implications on businesses and the economy at large.
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