Nigeria’s economy has continued on its downward trend, forcing global economy watchdogs to review their economic growth projections of the country.
In its World Economic Outlook (WEO) for October 2022 titled, “Countering the Cost-of-Living Crisis”, the International Monetary Fund (IMF) slashed Nigeria’s economic growth projection to 3.2 percent in 2022.
The new projection is 0.2 percent lower than the 3.4 percent the Washington-based institution projected in its July 2022 report. But the latest report, which reflects the global economic downturn, also impacted the economic outlook of Sub-Saharan Africa.
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According to the report, the economic growth of Sub-Saharan Africa is expected to drop 2 percent from its current 3.6 percent projection due to tighter financial and monetary conditions.
“In sub-Saharan Africa, the growth outlook is slightly weaker than predicted in July, with a decline from 4.7 percent in 2021 to 3.6 percent and 3.7 percent in 2022 and 2023, respectively — downward revisions of 0.2 percentage points and 0.3 percentage points, respectively.
“This weaker outlook reflects lower trading partner growth, tighter financial and monetary conditions, and a negative shift in the commodity terms of trade,” the report said.
However, while the downward projection is tied to global economic strains, some regions have a positive growth outlook. The report projected a 5.0 percent growth increase for both Middle East and Central Asia in 2022.
“This reflects a favorable outlook for the region’s oil exporters and an unexpectedly mild impact of the war in Ukraine on the Caucasus and Central Asia.
“In 2023, growth in the region is set to moderate to 3.6 percent as oil prices decline and the headwinds from the global slowdown and the war in Ukraine take hold,” the IMF said.
However, the Fund said global growth is expected to drop by nearly half, from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023.
The Middle East and Asia’s recording of economic growth increase amidst the global downturn is largely tied to oil export, underlining Nigeria’s missed opportunity to use the oil windfall to boost economic growth.
With the crisis rocking its downstream and upstream sectors, the African largest economy was losing huge revenue as other members of the Organization of Petroleum Exporting Countries (OPEC) cash in on the oil boom, which saw oil price jump above $130 per barrel.
Reeling on the mercy of oil thieves, Nigeria’s oil production has dropped far below its OPEC’s 1.826 million barrels per day (mbpd) output quota, greatly curtailing its revenue growth. With production output below 1mbpd, and non-oil sector underperformance, Nigeria has been recording revenue deficit that has undermined its economic growth.