IMF forecasts that Nigeria's economy will contract by 4.3% this year with worst recession in 37 years

NIGERIA'S economy has been forecast to contract by 4.3% during course of 2020 as a result of the impact of the global economic lockdown precipitated by the coronavirus pandemic according to a recent report published by the International Monetary Fund (IMF).

In its October World Economic Outlook report just released in Washington, the IMF projected that Nigeria’s economy will contract by 4.3% in real terms.

This represents a 1.1% improvement from the 5.4% that was projected in June and deeper than the 3.4% projected in April. However, the IMF projects that the economy will recover by 1.7% during the course of 2021.

Gita Gopinath, the IMF's chief economist and director of the research department, said oil-exporting countries are battling the health and economic impact of the Covid-19 pandemic and the impact of low oil prices. She added that the foreign debts been acquired by emerging market economies will not be enough and advised that there is a need for continued international support.

Ms Gopinath, said: “They have been hit by the health crisis and they have been hit because they are oil exporters and more importantly, they just don’t have the resources that advanced economies have to deal with this crisis. Because we don’t have a financial crisis at this point, many emerging markets are able to borrow at record levels in foreign currency this year relative to previous years.”

“There are going to be developing and low-income economies that would need debt relief and in some cases, restructuring of debt to make sure they have the space to do the spending that they need. This support could be in terms of concessionary financing, aid and debt relief and restructuring."

This contraction will be Nigeria's worst recession in 37 years and the second in five years, after a negative economic growth of 1.58% in 2016. In 1983, Nigeria’s gross domestic product at 2010 constant price receded by minus 10.93%.