IMF says Nigeria’s economy still vulnerable despite exiting recession

The International Monetary Fund (IMF) said on Friday that the Nigerian economy was still vulnerable despite the country exiting recession.

The IMF in a statement issued by its Media and Press Officer, Raphael Ranspach, welcomed the Federal Government’s actions to improve the power sector and business environment under the Economic Recovery and Growth Plan (EGRP).

The Fund said the macroeconomic and structural reforms remained urgent to contain vulnerability and support sustainable private sector led growth.

The IMF said its staff team led by the Senior Resident Representative and Mission Chief for Nigeria, Amine Mati, visited the country from December 6 to 20 to conduct the 2018 Article IV consultation, which led to this report.

The statement said: “Overall growth is slowly picking up but recovery remains challenging. Economic activity expanded by 1.4 per cent year-on-year in the third quarter of 2017 – the second consecutive quarter of positive growth after five quarters of recession — driven by recovering oil production and agriculture.

“However, growth in the non-oil-non-agricultural sector (representing about 65 per cent of the economy) contracted in the first three quarters of 2017 relative to the same period last year.

“Difficulties in accessing financing and high inflation continued to weigh on companies’ performance and consumer demand.

“Headline inflation declined to 15.9 per cent by end-November, from 18.5 per cent at end of 2016, but remains sticky despite tight liquidity conditions.

“High fiscal deficits – driven by weak revenue mobilisation – generated large financing needs, which, when combined with tight monetary policy necessary to reduce inflationary pressures, increased pressure on bond yields and crowded out private sector credit.”

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