Nigeria's Economy Set To Improve But Unemployment Likely To Remain

The International Monetary Fund (IMF) has projected that Nigeria’s economy could reach 2.5 percent in 2021 as incipient recovery in the economic activity takes root. The Fund said in a statement after Staff Concludes Virtual visit with Nigeria that, inflation is also expected to remain elevated in 2021.

However, the IMF said that inflation rate may likely decelerate in the second half of the year to reach about 15.5 percent. It hinged its projection on inflation around the likely positive impact of the removal of border controls and the elimination of base effects from elevated food price levels.

“The incipient recovery in economic activity is projected to take root and broaden among sectors, with GDP growth expected to reach 2.5 percent in 2021. “Inflation is expected to remain elevated in 2021, but likely to decelerate in the second half of the year to reach about 15.5 percent, following the removal of border controls and the elimination of base effects from elevated food price levels,” the IMF wrote in the statement.

The International Monetary Fund (IMF) says Nigeria’s economy is “recovering gradually” following the negative impact of COVID-19, but noted that the unemployment and inflation rates remain elevated.

The IMF team led by Jesmin Rahman held virtual meetings with the Nigerian authorities from June 1-8, 2021 to discuss recent economic, financial developments and outlook. The team said recent exchange rate measures are encouraging, and further reforms are needed to achieve a fully unified and market-clearing exchange rate. The resurfacing of fuel subsidies is concerning, particularly in the context of low revenue mobilisation.