The International Monetary Fund expects the Nigerian economy to recede by 3.4 percent this year, its worst recession in three decades, after which Africa’s biggest economy will see a 2.4 percent growth in 2021. Meanwhile, sub-Saharan Africa is forecast to contract by -1.6 percent but will have a growth of 4.1 percent next year.
The contraction comes amid a general slide in the global economy caused by the coronavirus pandemic. “There is extreme uncertainty around the global growth forecast but we know the global economy will be in recession in 2020, with markdowns on the projections expected across regions and countries,” the Fund said in its latest World Economic Outlook report released Tuesday.
The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. Global growth is projected to contract sharply by -3 percent in 2020, much worse than the recession seen during the financial crisis of 2008/2009.
In advanced economies, growth is projected at -6 percent while emerging markets and developing economies, which typically have normal growth levels well above advanced economies, are also expected to have negative growth. “For the first time since the Great Depression, both the advanced economies and emerging and developing economies are in a recession,” IMF Chief Economist Gita Gopinath said.
A rebound is expected in 2021, with the global economy projected to grow by 5.8 percent in a “baseline scenario” where the pandemic fades in the second half of this year, containment efforts can be gradually unwound, and economic activity normalizes helped by policy support.
But the risks for even more severe outcomes are substantial, the Fund noted, saying effective policies are essential to forestall the possibility of such outcomes. “The necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health,” IMF said.
Policymakers will also need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically considering the economic fallout is acute in specific sectors.
“And internationally, strong multilateral cooperation is essential to overcome the effects of the pandemic,” IMF said, including to help financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.
