Expert faults IMF-5.4% of Nigeria's economy projection

Renowned economist and first professor of capital markets in Nigeria, Prof. Uche Uwaleke has disagreed with the forecast of the International Monetary Fund (IMF) that says that Nigeria’s economy will contract by -5.4per cent.

According to him, the forecast by the IMF is only based on some assumptions which may or may not crystallize.

Recall that IMF recently projected a huge economic contraction for Nigeria, with Gross Domestic Product (GDP) by 5.4 per cent this year after an earlier forecast for a 3.4 per cent contraction and recovering to 2.6 in 2021.

The Fund in its June 2020 Global Economic Outlook, also added Sub-Saharan Africa’s GDP is expected to shrink by 3.2 per cent in 2020 due to the impact of the COVID-19 pandemic.

IMF explained that Nigeria faces economic distress not only from the coronavirus outbreak but also from a sharp fall in crude prices.

However Uwaleke argued that “All things considered, I do not think the Nigerian economy will contract by as much as -5.4 per cent this year as this revised forecast indicates given that Q1 of 2020 was able to eke out a positive growth of 1.87per cent.

Also, the government and the CBN have pumped and are still pumping money into the economy to contain the negative impact of COVID’19 on the economy. By the same token, much of the external loans already secured for either BOP support or for infrastructure have moratorium periods effectively postponing repayment obligations.

Moreover, oil price is beginning to climb following OPEC’s compliance to production cut agreement with OPEC+ coupled with the fact that the economy is gradually being restarted. I expect the tempo of economic activities to pick up as soon as flight operations resume and the ban on interstate travel is lifted,” he said.

He noted that the factors stated above will combine to ensure that any economic recession recorded will not be as severe as the IMF is projecting.

“I am optimistic that in the near future, IMF will be revising its forecasts confirming only a tepid recession for Nigeria.

“I’s important that the government continues to ramp up the level of support especially to agric and SMEs. The CBN should continue on its newfound path of monetary accommodation while on the fiscal side, efforts should be made to ensure that stimulus packages as well as existing government Social Intervention Schemes are closely monitored for Efficiency and Effectiveness,” Uwaleke added.