The International Monetary Fund (IMF) has raised Nigeria’s Gross Domestic Product (GDP) 2021 growth rate from 1.5 per cent to 2. 5 per cent.
This was contained in its World Economic Outlook (WEO) released by the organization on Tuesday, in which it , however, slightly reduced next year’s growth forecast from 2.5 per cent to 2.3 per cent.
The IMF also raised the 2021 projected Global growth from its October 2020 position of 5.5 per cent, to a new 6 per cent.
“Global growth is projected at 6 percent in 2021, moderating to 4.4 percent in 2022. The projections for 2021 and 2022 are stronger than in the October 2020 WEO.
“The upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility. High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions,” the Fund said in its latest WEO which was released as part of the on-going virtual Spring Meetings of the World Bank and IMF.
The organization said, however, that global prospects remained highly uncertain one year into the pandemic, adding, “New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment.
“Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic-induced disruptions and the extent of policy support. The outlook depends not just on the outcome of the battle between the virus and vaccines—it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis.”
On prospects and policies, the Fund said that although the contraction of activity in 2020 was unprecedented in living memory, extraordinary policy support prevented even worse economic outcomes.
It noted, “One year into the COVID-19 pandemic, a way out of this health and economic crisis is increasingly visible, but prospects remain highly uncertain. The strength of the recovery will depend in no small measure on a rapid rollout of effective vaccines worldwide. Much remains to be done to beat back the pandemic and avoid persistent increases in inequality within countries and divergence in income per capita across economies.”
On Monetary Policy spillovers during the recovery from COVID-19, the Fund said that Monetary policy easing by advanced economies early in the pandemic provided much financial relief to emerging markets but that looking ahead, it said that a multispeed recovery from the crisis would raise challenges.
“Our analysis suggests that while a US tightening resulting from a stronger US economy tends to be benign for most emerging market economies, a surprise tightening triggers capital outflows from emerging markets.
“It will thus be important for advanced economies to explain clearly how they will implement their monetary policies during the recovery.”
On recessions and recoveries of labour market, the IMF said that the fallout from the COVID-19 pandemic shock has continued, with young and lower-skilled workers particularly hard-hit.
It said, “Pre-existing employment trends favoring a shift away from jobs that are more vulnerable to automation are accelerating. Policy support for job retention is extremely powerful at reducing scarring and mitigating the unequal impacts from the acute pandemic shock. As the pandemic subsides and the recovery normalizes, a switch toward worker reallocation support measures could help reduce unemployment more quickly and ease the adjustment to the permanent effects of the COVID-19 shock on the labor market.”