Financial market analysts have advised managers of the nation’s economy to implement additional growth-enhancing policies that would take more Nigerians out of poverty.
The latest report issued by the International Monetary Fund (IMF) painted the short-term forecast for the Nigerian economy poorly.
Specifically, the fund revised its estimate for growth downward to 1.9 per cent for 2018 from 2.1 per cent, citing concerns about slow growth in agriculture and political uncertainties which restrain investment.
However, the fund held an optimistic view for the future as it upgraded its growth projection from an average of two per cent to 2.4 per cent between 2019 and 2023. The implication of this was that growth would trail population growth rate of 2.6 per cent for eight consecutive years.
This further indicated that Nigerians would get poorer on the average, while the prospects for strong employment growth would remain bleak.
The IMF predicted that the Nigeria’s population would grow faster than the growth in the real Gross Domestic Product (GDP) over the next five years.
This means that any expansion in Nigeria’s economy may not be enough to improve the standard of living of her citizens.
In a related development, the IMF expects the gross debt figure in the country to rise faster than the nominal GDP for this same period.
Commenting on the development, financial analysts at FSDH Merchant Bank said the uninspiring forecast stresses the need for Nigeria economic managers to implement additional growth-enhancing policies that would lift more Nigerians out of poverty.
According to the analysts, one of the major reasons for the sluggish growth in the Nigerian economy and weak revenue generation was the inadequate infrastructure in the country.
“Although FSDH Research believes Nigeria needs additional support in the area of infrastructure development, partnership arrangements with the private sector may offer a more cost effective funding method than debt option,” they said.
FSDH explained that Nigeria’s inflation rate forecast by the IMF shows that there is no hope of single digit inflation rate before 2023.
They said: “Although the government has been able to meet its debt obligations (interest and principal payments) so far, if the current situation is not addressed, the interest rate on government loans may increase because of the perceived elevated risk.
“The double digit inflation rate may make the yields on fixed income securities remain high in Nigeria and thus increase the finance cost for private sector operators.”
Also commenting on the IMF report, analysts at Afrinvest said: “While the specifics to this forecast are not public information, we note that the Fund’s main concerns with Nigeria are weak revenues which limit government spending and raise debt sustainability risks, and lack of structural reforms to boost the non-oil sector.
“This is unsurprising as we have always stated that the lack of reforms will keep growth weak and below pre-oil price shock levels of 6.0 – 7.0 per cent. However, we are slightly more optimistic that growth will breach 2.6 per cent as early as 2020.”