Downside risks to the Fund’s outlook

The IMF’s new World Economic Outlook (WEO) has pushed its global growth forecast for this year up marginally to 3.5% and left its 3.6% projection for 2018 unchanged. It has made sizeable upward adjustments for this year and next from three months ago for Russia to 1.4% (from 1.1% and 1.2%), Japan for 2017 to 1.2% (from 0.8%) and China for 2018 to 6.2% (from 6.0%). This WEO again sees the balance of risks titled towards the downside, citing a trend towards protectionism, faster-than-expected rate hikes in the US and a lightening of financial sector regulation.
Another risk cited is the vulnerability of China’s financial system to rapid credit growth. This week has brought the release of Q1 data from China for GDP, industrial production and retail sales, all pointing to a robust economy. 

The WEO calls for credible strategies in many countries to place public debt on a sustainable footing and adjust to lower commodity prices. The Fund made just this point in its recent 2017 Article IV consultation with the FGN.

The underlying price assumptions, based on the futures markets, for the Fund’s basket of three crude blends (including UK Brent) have been revised since January to an increase of 28.9% this year to US$55.2/b and a marginal fall of 0.3% for 2018 to US$55.1.

The forecast for growth in Nigeria this year is unchanged at 0.8%, and that for 2018 trimmed from 2.3% to 1.9%. These are the forecasts in its baseline scenario in the consultation documents, which assumes only limited reforms.

Trends in world output growth - FBNQuest Research

The WEO expects challenges in macroeconomic adjustment for all the leading oil producers in sub-Saharan African. It sees lukewarm growth ahead for Angola, Gabon and Chad as well as Nigeria.

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