Following the recent damning prediction by the International Monetary Fund (IMF) that the Nigerian economy will shrink this year, Bloomberg has reported that President Muhammadu Buhari’s economy plans are inadequate to save the nation from its slump.
The IMF initially cut its 2016 growth forecast for Nigeria to 2.3 percent in its April Regional Economic Outlook from 3.2 percent projected in February.
“I think there is a high likelihood that the year 2016 as a whole will be a contractionary year,” Gene Leon, the fund’s resident representative in Nigeria had said.
“While the economy should look better in second half of the year, growth will probably not be sufficiently fast, sufficiently rapid to be able to negate the outcome of the first and second quarters,” he added.
The World Bank on the other hand lowered its forecast to 0.8 percent last month, citing weakness from oil-output disruptions and low prices.
Buhari’s vision to diversify the economy of Nigeria, which relies on oil for more than 70 percent of revenue, has not translated into big investments, and infrastructure to support local manufacturers doesn’t exist yet, Renaissance Capital Ltd.’s Yvonne Mhango told Bloomberg.
“That’s the missing link and we haven’t heard enough on how they are going to improve and make the business environment more conducive,” Mhango said.
“There has been little color on fiscal policies to drive the growth agenda,” Mhango added.
John Ashbourne, an African economist at Capital Economics, also spoke to Bloomberg, stating that “Nigeria’s economy will be terrible, no matter what.”
“A lot of what has gone wrong in the economy –- notably fuel shortages and oil output disruptions –- happened in the second quarter rather than the first quarter. So things are likely to get quite a bit worse before they get better,” John said.
“This year is going to be terrible for the economy no matter what they do. The goal of policy now is damage limitation rather than sustained growth,” John added.