Nigeria bounces back as Africa's biggest economy *IMF predicts recovery in 2017

By Editor on 19/10/2016

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Nigeria has regained its pre-eminent position as the largest economy in Africa, a status it gained after the debasing of the economy in 2014, but lost at the beginning of 2016, due to economic slump.

It is also emerging that the country is sure to pull out of recession by next year, having officially dipped into that anaemic state in August this year.

These are all the predictions of the International Monetary Fund (IMF), in its current report, which said the country is ahead of South Africa and Egypt, two other African economic giants.

Nigeria was reported to have lost its spot as Africa’s biggest economy to South Africa in August 2016, following the recalculation of the country’s Gross Domestic Product.

However, the IMF’s World Economic Outlook for October 2016, puts South Africa’s GDP at 280.36 billion Dollars, from 314.73 billion Dollars in 2015.

Meanwhile, latest estimates from the IMF put Nigeria’s GDP at 415.08 billion Dollars, from 493.83 billion Dollars at the end of 2015.

 

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Although Egypt’s 2016 data was reported as unavailable, its 2015 size remained at 330.15 billion Dollars while that of Algeria, one of the largest economies on the continent, was put at 168.31 billion Dollars.

Global growth is projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017.

The forecast, revised down by 0.1 per cent point for 2016 and 2017 relative to April, reflects a more subdued outlook for advanced economies following the June U.K. vote in favour of leaving the European Union (Brexit) and weaker-than-expected growth in the United States.

The IMF also predicted that the Nigerian economy will grow by 0.6 per cent in 2017, effectively lifting the country out of an officially declared recession.

In the IMF’s WEC report released on October 5, Nigeria’s real GDP is expected to increase marginally by 0.6 per cent with Consumer Prices rising by 17.1 per cent also, Fitch ratings on the other hand, also projected a 2.6 per cent growth in Nigeria’s GDP for 2017.

Nigeria’s Current Account Balance is however also forecast to slump further by 0.4 per cent next year.

Beyond 2017, IMF expects global growth to gradually increase by 3.8 per cent in 2021.

This recovery in global activity, which is expected to be driven entirely by emerging market and developing economies, is premised on the normalization of growth rates in countries like Nigeria, Russia, South Africa, Latin America, and parts of the Middle East.

Although the global rating agency had reduced its forecast for the country’s 2016 GDP growth to 1 per cent from 1.5 per cent due to weak performance in the first half of the year, Fitch believes the economy will bounce back in 2017 but with downside risks if dollar liquidity remains tight.

Furthermore, Fitch believes that dollar liquidity will not significantly improve until market participants become more comfortable with the sustainability of the exchange-rate level, which is likely to require further narrowing of the spread between the official and parallel market rates.

The rating agency also increased Nigeria’s average CPI forecast for 2016 to 14 per cent from 11 per cent and expects the government to secure financing from multilateral development banks and bilateral sources.

 

 

 

Source Channels TV

Posted on October, 19 2016

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