Earlier in January, the IMF projected that Nigeria’s real Gross Domestic Product will grow by 2.5 per cent in 2020 and 2021.
The International Monetary Fund has announced a downward review of its 2020 growth forecast for Nigeria to two per cent from the 2.5 per cent it predicted earlier.
Inflation, which it said is driven by higher food prices, has risen, marking the end of the disinflationary trend seen in 2019. The IMF said external vulnerabilities are increasing, reflecting a higher current account deficit and declining reserves that remain highly vulnerable to capital flow reversals even though the exchange rate has remained stable, helped by steady sales of foreign exchange in various windows.
“The tightening of monetary policy in January 2020 through higher cash reserve requirements to respond to looming inflationary pressures is welcome,” it said. “Progress on structural reforms—particularly in Doing Business, finalising power sector reforms, and strengthening governance—is commendable. Major policy adjustments remain necessary to contain short-term vulnerabilities, build resilience and unlock growth potential.
Furthermore, the IMF noted that banking system vulnerabilities should continue to be addressed as the mission welcomed recent efforts to reduce legacy non-performing loans.
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