IMF: Nigeria’s Economy to Overtake South Africa

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Chief Economist of IMF, Maurice Obstfeld

Nigeria is set to overtake South Africa and reclaim its spot as the biggest economy in Africa in 2017, the International Monetary Fund (IMF) has predicted.

Speaking on Tuesday during the unveiling of the World Economic Outlook report at the organisation’s headquarters in Washington, Maurice Obstfeld, IMF’s Chief Economist, said rising political uncertainty had reduced consumer and business confidence in South Africa.

He said, “Nigeria is expected to emerge from the 2016 recession caused by low oil prices and the disruption of oil production. Growth in 2017 is projected at 0.8% owing to recovering oil production and ongoing strength in the agricultural sector.

He noted that concerns about policy implementation, market segmentation in a foreign exchange market that remains dependent on central bank interventions (despite steps to liberalise the foreign exchange market) and banking system fragilities are expected to weigh on activities in the medium term.

In its July projections, the Bretton Woods institution had said the global economy would grow by 3.5% in 2017 and 3.6% in 2018.

It also projected that the growth will reach 3.8% by 2021.

However, IMF called on countries to remain cautious as the growth currently experienced is fragile, advising that ambitious reforms are necessary to avoid a decline.

“Growth in oil exporting advanced countries is projected to recover. In 2017, it is forecast to rise to 1.4% in Norway and increase (by about 1.5%) to 3% in Canada. After averaging $43 a barrel in 2016, oil prices are expected to average $50.3 a barrel in 2017 (down from $55.2 a barrel in April 2017 WEO) and stay at about that level in 2018,”‎ he stated.