The International Monetary Fund (IMF) has announced an updated upward projection for the Nigerian economic growth forecast of 2021 to 2.5 percent from its earlier projection of 1.5 percent. This was disclosed in the World Economic Outlook (WEO) released on Tuesday, saying the new Gross Domestic Product (GDP) growth projection is 1.0 percent higher than the earlier projection in January. The IMF also revealed an upward projection for the 2021 Global growth from its October 2020 report from 5.5 percent to 6 percent. However, reported a slight decrease in Nigeria’s 2022 growth forecast of 2.3 percent from this year’s 2.5 percent.
“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 ongoing virtual Spring Meetings of the World Bank and IMF.
The organization noted that despite the COVID-19 pandemic “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.”
It also said the global economy showed prospects, saying “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 recessions and recoveries of labour market, the fund said the lower-skilled workers are most hit.
“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.”