Nigeria to be out of recession in 2017 – IMF

The International Monetary Fund (IMF) has projected that Nigeria’s economy will be out of recession in 2017.

The economy will also grow by 0.6 percent next year, the IMF said.

According to the IMF World Economic Outlook (WEO) released yesterday in Washington, it is projected that the recession will outlast 2016 with a Gross Domestic Product (GDP) contraction of 1.7 percent.

“Sub-Saharan Africa’s largest economies continue to struggle with lower commodity revenues, weighing on growth in the region,” IMF said.

“Nigeria’s economy is forecast to shrink 1.7 percent in 2016 and South Africa’s will barely expand. By contrast, several of the region’s non resource exporters, including Côte d’Ivoire, Ethiopia, Kenya, and Senegal are expected to continue to grow at a robust pace of more than five percent this year.”

IMF also forecasted a GDP contraction and subsequent recession for Russia and Brazil throughout 2016.

The fund added: “Growth in emerging Asia and especially India continues to be resilient.

“India’s gross domestic product is projected to expand 7.6 percent this year and next, the fastest pace among the world’s major economies.”

Maurice Obstfeld, IMF chief economist and economic counsellor, who spoke on the outlook, said global economic growth would remain subdued in 2016 following a slowdown in the United States of America and Britain’s vote to leave the European Union.

Obstfeld also stated that the fund forecasted a slight pickup in 2017 and beyond, driven mainly by emerging market strength.

“Taken as a whole, the world economy has moved sideways. We have slightly marked down 2016 growth prospects for advanced economies while marking up those in the rest of the world.”

Nigeria’s economy was earlier projected to contract by 1.8 percent in 2016, but the October version of the WEO has seen that reviewed positively to a contraction of only 1.7 percent.

The country has recorded a 0.36 and 2.06 percent contraction in the first and second quarter of 2016 respectively, plunging into its worst recession in 29 years.

On Monday, the European Union (EU) advised the Federal Government to devalue the naira as part of measures to tackle the recession.

The EU delivered the message through its Counsellor and Head of Trade and Economics Section,  Fillippo Amato in an interview with the News Agency of Nigeria (NAN).

Amato said the recession cannot be addressed with traditional development tools.

He added that the recession was due to a number of factors, including fall in oil prices and resurgence of militancy in the Niger Delta.

“To come out of recession, the country has to take brave decisions, regardless of how unpopular they may be such as fully and effectively devaluing the naira…”

“Devaluing the naira is a measure, which will finally reassure investors and attract new capitals to the country.

“At the same time, it will further reduce imports thereby removing artificial forex restrictions and removing any potential waste of scarce resources such as the fuel subsidy