IMF Cuts South Africa’s and Nigeria’s Economic Growth Forecast for 2016

LONDON, Capital Markets in Africa — The International Monetary Fund (IMF) recently published the latest update to its world economic outlook. The document is tagged “Subdued Demand, Diminished Prospects”.

In the January publication, the global economic prospects is  downgraded to projected at 3.4 percent in 2016 (compare to 3.6 percent in October 2015 forecast) and 3.6 percent in 2017 (3.8 percent in October 2015 release). The pickup in global activity is projected to be more gradual than in the October 2015 World Economic Outlook (WEO), especially in emerging market and developing economies.

In addition, the IMF expected the Sub-Saharan African to grow by 4.0 percent in 2016, a cut from IMF’s previous forecasts guesses of 4.3 percent.  However, the Washington-based lender stated that most countries in sub-Saharan Africa will see a gradual pickup in growth, but with lower commodity prices, to rates that are lower than those seen over the past decade. This mainly reflects the continued adjustment to lower commodity prices and higher borrowing costs, which are weighing heavily on some of the region’s largest economies (Angola, Nigeria, and South Africa) as well as a number of smaller commodity exporters.  

South Africa’s will probably expand 0.7 percent in 2016, compared with October’s estimate of 1.3 percent, the Washington-based lender said in an update to its World Economic Outlook report on Tuesday. Likewise, the IMF cut its projection for 2017 by 0.3 percentage points to 1.8 percent. Growth in Nigeria is projected to fall by 0.2 percent in 2016 to 4.1 percent, and down by 0.3 percent in 2017 to 4.2 percent. The Africa’s largest economy will also grow at 3.0 percent  in 2015, although the Q315 GDP growth rebounded slightly to 2.8% from 2.4% in Q215, but is still well below the average 5.3% growth rate seen over

The IMF emphasised that risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy: a generalized slowdown in emerging market economies, China’s rebalancing, lower commodity prices, and the gradual exit from extraordinarily accommodative monetary conditions in the United States. If these key challenges are not successfully managed, global growth could be derailed.