IMF admits Nigerian economy ‘will probably shrink’ in 2016

The International Monetary Fund (IMF) has admitted that the Nigerian economy “will probably” shrink in 2016, performing below the IMF forecast for the country. Speaking in Abuja on Monday, Gene Leon, IMF resident representative in Nigeria, said energy shortages and delayed budget weigh on output in Africa’s largest economy.

Gene Leon

After contracting by 0.4 percent in the first quarter of 2016, Leon said Nigeria will experience some growth in the second half of the year, but he added that it would not be enough to upturn initial shrinkage. “I think there is a high likelihood that the year 2016 as a whole will be a contractionary year,” Bloomberg quoted Leon as saying.

“While the economy should look better in second half of the year, growth will probably not be sufficiently fast, sufficiently rapid to be able to negate the outcome of the first and second quarters.”

The IMF had initially cut its 2016 growth forecast for Nigeria to 2.3 percent in its April Regional Economic Outlook from 3.2 percent projected in February.

The World Bank on the other hand lowered its forecast to 0.8 percent last month, citing weakness from oil-output disruptions and low prices.

Leon said “most people would agree that if you should fix one thing in this country, it should be power. There is a need to start changing the power equation from 2016, from today, not tomorrow or later.”

He added that the inflation, which is currently at 15.6 percent, may surge a little more in the months ahead but would not go beyond 20 percent before the end of 2016