INTERNATIONAL Monetary Fund (IMF) officials have warned that Nigeria is facing the prospect of her worst recession in 30 years as a result of the economic impact of the coronavirus pandemic that is currently sweeping the globe.
Being a mono-economy with about 95% of government revenue coming from the sale of crude oil, the global economic collapse brought about by the coronavirus pandemic depressed crude oil prices to $12 a barrel on international markets. This has made the government revise its 2020 budget of $28.8bn downwards twice as the combination of limited sales and depressed prices look set to hit revenue hard.
Yesterday, the IMF added its voice to the concern about the Nigerian economy, warning that the country is projected to face her worst recession in 30 years. According to the IMF’s April 2020 World Economic Outlook report, Nigeria’s economy will recede by 3% in 2020 due to the coronavirus pandemic.
Nigeria has only recently come out of recession after her economy shrunk by 1.51% in 2016 and over the last six years she has enjoyed between 1% and 2% gross domestic product (GDP) growth. 1987 was the last time Nigeria witnessed a major economic collapse when the economy shrank by 10.87% but by 1991, this gap had narrowed to 0.6%.
Gita Gopinath, the IMF’s chief economist and director of its research department, said the recession to be experienced would be the worst since the Great Depression between 1929 and 1932 when the advanced economies of the world shrunk by 16%. However, it is projected that the Nigerian economy will rebound by 2.4% in 2021.
Ms Gopinath said: “For the first time since the Great Depression, both the advanced economies and emerging and developing economies are in a recession. For 2020, growth in advanced economies is projected at -6%.
“Emerging markets and developing economies which typically have normal growth levels well above advanced economies are also projected to have negative growth of -1% and -2.2% if you exclude China.”
She added that the fund has projected that 170 countries across the world would experience a shrinkage in their income per capita this year. According to Ms Gopinath, the recovery in 2020 would be partial and the projections provided in the report are the baseline scenario.