The International Monetary Fund (IMF) has warned Nigeria and other oil-dependent countries of a possible crash of the prices of crude oil in the near future.
This just as it projected a 1.9 per cent economic growth for Nigeria in 2019.
The Fund also predicted that Nigeria’s economy will grow from 0.8 per cent in 2017 to 2.1 per cent by the end 2018.
The IMF made these predictions at its latest World Economic Outlook (WEO) Report launched in Washington DC yesterday.
On the possible crash in crude oil prices, the IMF advised oil-dependent economies, including Nigeria, to intensify their economic diversification efforts.
IMF said: “Some low-income countries like Mozambique and Nigeria have experienced financial stress or deteriorating loan quality in recent years as growth has moderated and corporate balance sheets have weakened.
“Further deterioration in loan quality would impair credit intermediation and ability of the banking sector to support growth, which would raise the risk of cost recapitalisation and severely burden the already strained public finances.’’
IMF’s director of research, Maurice Obstfeld said at the WEO press conference that global economy would grow by 3.9 per cent in 2018.
Obstfeld said the forecast was borne out of the continued strong performance in the Euro area, Japan, China and the United States.
“Despite the good near-term news, longer-term prospects are more sobering. Advanced economies are far facing ageing population, falling rates of labour force and low productivity growth.
“Emerging and developing economies present a diverse picture. Many of these countries need to diversify their economies to boost future growth and resilience,’’ he said.
According to Obstfeld, global financial conditions remained loose despite the approach of higher monetary policy interest rates and enabling a further build-up of asset-market vulnerabilities.
According him, the recent escalating tension over trade between United States and China presented a growing risk for global financial stability.
He explained: “The prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely.
“While some governments are pursuing substantial economic reforms, trade disputes risk diverting others from the constructive steps they would need to take now to improve and secure growth prospects.’’
The IMF encouraged each national government to advance growth by resolving issues of climate change, infectious diseases, cyber-security, corporate taxation and corruption, among others.
Meanwhile, the IMF has said that Nigeria’s inflation will remain in double digits in 2018 as it raised concerns over rising public and private debts globally, calling on governments to invest more in people and build up fiscal buffers as well as infrastructure that would not only engender but sustain economic growth.
According to the World Economic Outlook released at the 2018 IMF/World Bank Spring Meetings holding in Washington DC, Nigeria’s inflation is however expected to moderate in the coming years.
The rate at which consumer prices rise in the country have been on a steady decline dropping from around 18 per cent to 13.34 per cent in March this year.
“Inflation in sub-Saharan Africa is projected to moderate slightly in 2018 and 2019 but is expected to remain in double digits in key large economies, reflecting the pass-through effects of currency depreciation and their impact on inflation expectations (Angola), supply factors, and assumed monetary policy accommodation to support fiscal policy (Nigeria),” the report read.
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