Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 50)

Data from the International Monetary Fund (IMF) shows that real GDP is projected to contract by 3.25 percent at the end of 2020 due to the negative impact of the COVID-19 pandemic.1 The economy is expected to recover with minimal growth of 1.5 percent in 2021 with output returning to its pre-pandemic level by the year 2022. Fiscal deficits are expected to remain elevated as revenue collections have significantly dropped. Inflation is also expected to increase, which places the economy in a very vulnerable state. The IMF suggests that major policy adjustments such as exchange rate and monetary policy reforms, increased revenue mobilization and structural reforms need be implemented to achieve economic recovery and growth. The removal of fuel subsidy as well as the devaluation of the naira signals adequate political will in embarking on bold reforms. However, future economic reforms need to be proactive rather than reactionary, and wholistic rather than in parts. Furthermore, the government should leverage on high level public officials that have demonstrated the will for achieving structural change, technical assistance from external development institutions, and the experience of best practice countries.

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