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W/Bank, IMF, FSDH Predict Strong Economic Growth for Nigeria
- By Williams Ekanem
- Published October 26th, 2010
- Washington File
- Unrated
THE International Monetary Fund (IMF) has revised the growth forecast for Nigeria to 7.4% both for 2010 and 2011 up from 7.0% and 7.3% released in its July report.
IMF linked the revised growth on the pickup in global demand and the strengthening of oil prices. It added that Nigeria’s continued strong growth in the non-oil sector is being supported by increasing oil production, a result of reduced instability in the Niger Delta region. This corroborates FSDH’s research which had released a growth forecast of between 7% and 8% for Nigeria in 2010.
In the same vein, chairman of the World Bank and IMF board, Dr Olusegun Aganga in his address at the openibg plenary session of the World annual meeting a fort night ago said, “ It is possible that Africa’s Lion-like Nigeria with its six per cent GDP growth last year and a robust GDP growth of 7.4 per cent in the first half of this year could rival Asia’s Tigers and the BRICs in the near future.” Nigeria was the only country mentioned in the two and half pages long speech.
He therefore called on the Bretton Woods Institutions to further support these emerging members with financing, particularly in the area of infrastructure and knowledge as they develop as new growth centres. IMF managing director, Dominique Strauss-Khan corroborated Aganga’s position when in his remarks he stated: “Looking into Asia, looking into America, things are going rather well. Even looking to Africa, where most countries in sub Saharan Africa are going back to growth much faster than they did in the past.” Following an impressive performance of the global economy in the first half of 2010, the IMF has revised upward its global growth forecast for 2010 to 4.8% from the 4.6 per cent released in July, 2010. The upward revision is contained in the IMF’s World Economic Outlook (WEO) October 2010 edition titled ?Recovery, Risk and Rebalancing? released during the week.
According to the report, economic recovery is proceeding broadly as expected, but downside risks remain elevated. It added that most advanced economies and a few emerging economies still face large adjustments including the need to strengthen household balance sheets, stabilize and subsequently reduce high public debt, and repair and reform their financial sectors.
IMF notes that recoveries in advanced economies are proceeding at a sluggish pace, and high unemployment poses major social challenges. By contrast, many emerging and developing economies are seeing strong growth, because they did not experience major financial excesses just prior to the Great Recession. IMF recommends that sustained, healthy recovery rests on two rebalancing acts: internal rebalancing, with a strengthening of private demand in advanced economies, allowing for fiscal consolidation; and external rebalancing, with an increase in net exports in deficit countries Looking at the regional prospects, the global growth in 2010 will be driven by the expected growth rate of 7.9 per cent from Asia, revised upward from 7.4 per cent in July WEO update. The region accounts for about 26 per cent of global GDP. The two biggest economies in the region – China and India are expected to grow by 10.5 per cent and 9.7 per cent respectively, driven mainly by strong exports and private demand. Emerging and Developing economies are projected to expand 7.1 per cent and 6.4 per cent for 2010 and 2011 respectively. In advanced economies, growth is projected at 2.7 per cent and 2.2 per cent, for 2010 and 2011 respectively. Growth in Sub-Saharan Africa is maintained at 5 per cent in 2010 same as in the July 2010 WEO and increase to 5.5 per cent in 2011 representing a drop of 0.4 per cent over the projection released in WEO, July, 2010. IMF notes that, policy responses and stronger economic frameworks are helping many emerging economies shore up internal demand and attract capital flows. The forecast prices of oil, based on future market prices for 2010 and 2011are $76.20 per barrel and $78.75 per barrel respectively. On the flip side, the report said financial stability suffered a major setback as market volatility increased and investor confidence dropped which led to fall in prices in many stock exchanges. Heavy selling of the sovereign debt of vulnerable euro area economies rattled the banking system, triggering a systemic crisis. It added that extension risks have been reduced by unprecedented European policy initiatives—the European Central Bank’s Securities Markets Program and euro area governments’ European Stabilization Mechanism—and by a front-loading of fiscal adjustment
IMF linked the revised growth on the pickup in global demand and the strengthening of oil prices. It added that Nigeria’s continued strong growth in the non-oil sector is being supported by increasing oil production, a result of reduced instability in the Niger Delta region. This corroborates FSDH’s research which had released a growth forecast of between 7% and 8% for Nigeria in 2010.
In the same vein, chairman of the World Bank and IMF board, Dr Olusegun Aganga in his address at the openibg plenary session of the World annual meeting a fort night ago said, “ It is possible that Africa’s Lion-like Nigeria with its six per cent GDP growth last year and a robust GDP growth of 7.4 per cent in the first half of this year could rival Asia’s Tigers and the BRICs in the near future.” Nigeria was the only country mentioned in the two and half pages long speech.
He therefore called on the Bretton Woods Institutions to further support these emerging members with financing, particularly in the area of infrastructure and knowledge as they develop as new growth centres. IMF managing director, Dominique Strauss-Khan corroborated Aganga’s position when in his remarks he stated: “Looking into Asia, looking into America, things are going rather well. Even looking to Africa, where most countries in sub Saharan Africa are going back to growth much faster than they did in the past.” Following an impressive performance of the global economy in the first half of 2010, the IMF has revised upward its global growth forecast for 2010 to 4.8% from the 4.6 per cent released in July, 2010. The upward revision is contained in the IMF’s World Economic Outlook (WEO) October 2010 edition titled ?Recovery, Risk and Rebalancing? released during the week.
According to the report, economic recovery is proceeding broadly as expected, but downside risks remain elevated. It added that most advanced economies and a few emerging economies still face large adjustments including the need to strengthen household balance sheets, stabilize and subsequently reduce high public debt, and repair and reform their financial sectors.
IMF notes that recoveries in advanced economies are proceeding at a sluggish pace, and high unemployment poses major social challenges. By contrast, many emerging and developing economies are seeing strong growth, because they did not experience major financial excesses just prior to the Great Recession. IMF recommends that sustained, healthy recovery rests on two rebalancing acts: internal rebalancing, with a strengthening of private demand in advanced economies, allowing for fiscal consolidation; and external rebalancing, with an increase in net exports in deficit countries Looking at the regional prospects, the global growth in 2010 will be driven by the expected growth rate of 7.9 per cent from Asia, revised upward from 7.4 per cent in July WEO update. The region accounts for about 26 per cent of global GDP. The two biggest economies in the region – China and India are expected to grow by 10.5 per cent and 9.7 per cent respectively, driven mainly by strong exports and private demand. Emerging and Developing economies are projected to expand 7.1 per cent and 6.4 per cent for 2010 and 2011 respectively. In advanced economies, growth is projected at 2.7 per cent and 2.2 per cent, for 2010 and 2011 respectively. Growth in Sub-Saharan Africa is maintained at 5 per cent in 2010 same as in the July 2010 WEO and increase to 5.5 per cent in 2011 representing a drop of 0.4 per cent over the projection released in WEO, July, 2010. IMF notes that, policy responses and stronger economic frameworks are helping many emerging economies shore up internal demand and attract capital flows. The forecast prices of oil, based on future market prices for 2010 and 2011are $76.20 per barrel and $78.75 per barrel respectively. On the flip side, the report said financial stability suffered a major setback as market volatility increased and investor confidence dropped which led to fall in prices in many stock exchanges. Heavy selling of the sovereign debt of vulnerable euro area economies rattled the banking system, triggering a systemic crisis. It added that extension risks have been reduced by unprecedented European policy initiatives—the European Central Bank’s Securities Markets Program and euro area governments’ European Stabilization Mechanism—and by a front-loading of fiscal adjustment
