Nigeria’s economic growth forecast for 2022 has been reviewed upwards by the International Monetary Fund in anticipation of a decline of global output due to the ongoing Russia-Ukraine war.
This was contained in IMF’s its April World Economic Outlook (WEO) report released as part of activities at the ongoing IMF/World Bank spring meeting in Washington.
The Washington based lender reduced the expected global output in 2022 to 3.6% in April down from 4.4% expected in January. These projections are worrisome since global output grew by 6.1% in 2021, a year hunted by the effects of the pandemic.
Nigeria, on the other hand, had an upward review of its economic growth projections. The International Monetary Fund (IMF) has projected the Nigerian economy to grow by 3.4% in 2022, up from 2.7% earlier projected.
The IMF explained that the review was a result of the growing tensions in Europe. It said, “Compared to our January forecast, we have revised our projection for global growth downwards to 3.6 per cent in both 2022 and 2023. This reflects the direct impact of the war on Ukraine and sanctions on Russia, with both countries projected to experience steep contractions.”
This year’s growth outlook for the European Union has been revised downward by 1.1 percentage points due to the indirect effects of the war, making it the second-largest contributor to the overall downward revision.
The IMF added that “The war adds to the series of supply shocks that have struck the global economy in recent years. Like seismic waves, its effects will propagate far and wide—through commodity markets, trade, and financial linkages”
However, the IMF gave an upward review of Nigeria’s economic growth projection due to the benefits the country would derive from surging oil prices.
IMF said, “The medium-term outlook is revised downwards for all groups, except commodity exporters who benefit from the surge in energy and food prices.”
Also, the IMF upgraded its economic growth forecast for the Sub-Saharan African region to 3.8 per cent in 2022, representing a 0.1 percentage point increase from the 3.7 per cent forecast made in January.
“Higher food prices will hurt consumers’ purchasing power—particularly among low-income households—and weigh on domestic demand. Social and political turmoil, most notably in West Africa, also weigh on the outlook.
“The increase in oil prices has however lifted growth prospects for the region’s oil exporters, such as Nigeria. Overall, growth in sub-Saharan Africa is projected at 3.8 percent in 2022.″
Note that the emigration of about 5 million Ukrainians to neighboring nations, particularly Poland, Romania, Moldova, and Hungary, adds to the region’s economic strains.
Russia is a key provider of oil, gas, and metals, as well as wheat and grain. Due to dwindling availability, many goods’ prices have skyrocketed.
The most affected commodity importers are those in Europe, the Caucasus and Central Asia, the Middle East and North Africa, and Sub-Saharan Africa.
However, the rise in food and fuel prices would harm lower-income people around the world, notably in the Americas and Asia.
Nigeria may be able to reap the benefits of rising oil prices. The inability to satisfy OPEC oil quotes, on the other hand, is cause for alarm.
Nigeria’s crude oil earnings are down more than half from the $80 billion generated between 2011 and 2013 when oil prices were high.
According to Tony Elumelu, Nigeria loses approximately 95% of its oil production to thieves. According to Shell, the Bonny Terminal, which is intended to receive over 200,000 barrels of crude oil per day, only receives about 3,000 barrels per day, prompting the company to pull out of Nigeria.
