The International Monetary Fund, yesterday, slashed its growth forecast for the Nigerian economy this year, raising the alarm that a combination of plunging oil revenues and weakened investor confidence may push the country into recession.
The IMF also reversed itself on Nigeria, saying that it expects Africa’s largest economy to contract by 1.8 per cent this year, after having forecast in April a 2.3 per cent expansion.
“Nigeria’s stall, and sluggish activity in the number two economy, South Africa, is expected to pull down economic growth across sub-Saharan Africa, the IMF said, forecasting a “dramatic implication.
“In 2016, regional output growth will fall short of population growth, implying declining per capita incomes,” it said.
Nigeria’s economy has been battered hard by the plunge in oil prices, the main source of the country’s income, as well as prices of other key commodities.
In addition, rebels in the southern oil region have forced crude production cutbacks, and internal unrest, especially attacks by the Boko Haram group in the north, has also hurt the economy.
Inflation hit an 11-year high of 16.5 per cent in June as prices of food and energy jumped after the government freed up the naira currency in April, allowing it to plummet against the US dollar.
Also weighing on output have been electricity shortages due to militants’ sabotage of the gas pipelines in the Niger Delta region that fire power plants.