The International Monetary Fund (IMF) also stated that the country’s real Gross Domestic Product is expected to recover to its pre-pandemic level only in 2022.
It stated in its report titled ‘IMF executive board concludes 2020 Article IV consultation with Nigeria’ that real GDP growth in 2021 was expected to turn positive at 1.5 per cent.
It stated, “Nigeria’s recovery is expected to be weak and gradual under current policies. Real GDP growth in 2021 is expected to turn positive at 1.5 per cent. Real GDP is expected to recover to its pre-pandemic level only in 2022.”
The IMF stated that the near-term outlook was subject to downside risks from pandemic-related developments with Nigeria experiencing a second wave.
Over the medium term, subdued global recovery and decarbonisation trends were expected to keep oil prices low, it stated.
The IMF said non-oil growth was also expected to remain sluggish, reflecting inward-looking policies and regulatory uncertainties.
Part of the report read, “The COVID-19 pandemic has placed Nigeria at a critical juncture.
“The country entered the crisis with falling per capita income, high inflation, and governance challenges.
“Policy adjustments and reforms designed to shift the country from its dependence on oil and to diversify the economy toward private sector-led growth will set Nigeria on a more sustainable path to recovery.”
It noted that Nigeria’s economy had been hit hard by the COVID-19 pandemic.
Following a sharp drop in oil prices and capital outflows, real GDP was estimated to have contracted by 3.2 per cent in 2020 amidst the pandemic-related lockdown.
The unemployment rate reached 27 per cent in the second quarter of 2020, with youth unemployment at 41 per cent.
According to the report, the Nigerian authorities acted swiftly to adopt a pandemic-related support package equivalent to 0.3 per cent of GDP in the 2020 revised federal budget despite limited fiscal space.
It stated, “External vulnerabilities due to lower oil prices and weak global demand have increased, with the current account remaining in deficit in the first half of 2021.
“In April 2020, Nigeria received IMF emergency financial assistance of $3.5bn under the Rapid Financing Instrument to help cushion the impact of the pandemic.”
The IMF said socioeconomic conditions had deteriorated, with rising food inflation, elevated youth unemployment, mass protests in October 2020, and surveys show worsening food insecurity with a significant impact on the vulnerable.