The International Monetary Fund (IMF) has admitted that the Nigerian economy will perform below the initial expectation of the IMF for the country this year.
IMF actually said, on Monday in Abuja, the economy “will probably” shrink in 2016.
The body’s resident representative in Nigeria said energy delayed signing of the budget as well as energy shortages disturbed the output of Africa’s largest economy.
After reducing by 0.4 percent in the first quarter of 2016, Leon said Nigeria will experience some growth in the second half of the year, the growth will however not be enough to correct the initial contracting of the economy.
“I think there is a high likelihood that the year 2016 as a whole will be a contractionary year,” Bloomberg quoted Leon as saying.
“While the economy should look better in second half of the year, growth will probably not be sufficiently fast, sufficiently rapid to be able to negate the outcome of the first and second quarters.”
The IMF had originally put its 2016 growth forecast for Nigeria at 2.3 percent in its April Regional Economic Outlook cutting it from the 3.2 percent projected in February.
The World Bank similarly lowered its forecast to 0.8 percent last month, blaming weakness from oil-output disruptions and low prices.
Leon said “most people would agree that if you should fix one thing in this country, it should be power. There is a need to start changing the power equation from 2016, from today, not tomorrow or later.”
He further said that even though inflation would not go beyond 20% before the end of 2016, it may surge from its current 15.6% in the months ahead.