International Monetary Fund (IMF) said on Tuesday that
Nigeria would contract in 2016, “lower than earlier growth projections as the
country battles through foreign currency shortages as a result of lower oil
receipts, low power generation, and weak investor confidence.”
This is contained in the IMF flagship World Economic
Report (WEO) in which it equally revised
its earlier 2016/2017 global growth forecast 0.1 percentage points due to the
impact of the June 23 referendum, which favoured Britain’s exit from the
European Union.
“Taking into account the better-than-expected economic
activity so far in 2016 and the likely impact of Brexit under the assumptions
just described, the global growth forecasts for 2016 and 2017 were both marked
down by 0.1 percentage points relative to the April 2016 WEO, to 3.1 percent
and 3.4 percent, respectively,” the IMF said in the WEO released on Tuesday.
Africa’s largest economy is headed for a recession, after
GDP growth rate contracted by 0.36 percent in the first three months of 2016
and “it appears impracticable that the second quarter would not follow suite
since factors that led to the contraction in Q1, intensified in Q2,” analysts
said on Monday.
The country’s economic problems were kicked up by capital
controls imposed by regulators and a lack of policy direction by the new
government, which inhibited the flow of foreign investment.
Combined with soaring inflation, which beat analysts’
forecasts, climbing to an 11-year high of 16.5 percent (year-on-year) in the
month of June from 15.6 in May, and the precarious state of banks which has
subdued credit extension.
And according to the Bretton Woods Institution, “the
revisions for the largest low-income country are the main reason for the
downgrade in growth prospects for the low-income developing countries
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