IMF predicts Nigeria’s GDP to drop by 5.4 percent in 2020 fiscal year

International Monetary Fund (IMF) has predicted that Nigeria's Gross Domestic Product (GDP) would drop by 5.4 percent in the 2020 fiscal year, according to a news report by The Nation.

This is against its earlier, 3.4 percent decline in GDP prediction in April this year.

However, the global financial institution said Nigeria's economy will see a rebound of 2.6 percent in 2021 suggesting an increase of 200 basis points when compared to the 2.4 percent April projection for 2021.

Nigeria faces economic distress not only from the coronavirus outbreak but also from a sharp fall in crude oil prices.

The Federal Government has said it expects the economy to contract by 3.4 percent this year. In May, however, the Minister of Finance, Budget, and National Planning, Zainab Ahmed has said that the economy could shrink by as much as 8.9 percent this year in a worst-case scenario.

Meanwhile, the cost of living in Nigeria has risen steadily. Annual inflation rose for the ninth straight month in May, to a two-year high of 12.4 percent.

On the global economy in 2020 and 2021, the IMF predicted a decline of 4.9 percent and 3.0 percent respectively, representing a 3.0 percent contraction in 2020 and a recovery of 2.2 percent in 2021.

According to the IMF, compared to our April World Economic Outlook forecast, "we are now projecting a deeper recession in 2020 and a slower recovery in 2021."

This forecast said, "assumes that financial conditions-which have eased following the release of the April 2020 WEO, will remain broadly at current levels."

IMF said it is projecting a synchronized deep downturn in 2020 for both advanced economies and emerging markets and developing economies.

The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast.