IMF predicts Nigeria economy will grow by 7.4 % in 2014, despite insecurity, crude oil theft

The International Monetary Fund (IMF) remains bullish on Nigerian economy despite festering security challenges and oil thefts. The IMF projects a real Gross Domestic Product (GDP) growth of 7.4 per cent for Nigeria in 2014, up from  6.2 per cent it had projected  for the economy by this time last year.

This is contained in the IMF's World Economic Outlook (WEO) launched in Washington DC on Tuesday as part of the pre-meetings events of the 2013 IMF/World Bank annual meetings.

In the outlook published annually by the Bretton Woods institution, it explained that higher oil prices at the international market showed strong economic prospects for Nigeria despite the aforementioned challenges the country was facing.

“In Nigeria, still high oil prices underpinned strong growth, notwithstanding temporary downdrafts from security problems in the north and oil theft,” it said.

The report indicated that the growth in sub-Saharan Africa was robust between 2012 and 2013 and was expected to accelerate somewhat in 2014, reflecting strong domestic demand in most of the region.

He said, 'Nevertheless, spillover from sluggish external demand, reversal of capital flows, and declines in commodity prices are contributing to somewhat weaker growth prospects in many countries relative to the April 2013 WEO.

'Policies should aim to rebuild room for policy manoeuvring where it has been eroded, and more broadly to mobilise revenue to address social and investment needs.'

In order to achieve sustainable and inclusive growth in the medium term, the IMF urged policy makers in African countries to deepen structural reforms and give priority to infrastructure investment and social spending.

'Activity in sub-Saharan Africa remained strong in the beginning of 2013, although marginally down from 2012, supported in most countries by domestic demand. Growth was particularly strong in low-income and fragile states, with the notable exceptions of Mali and Guinea-Bissau, which were affected by internal civil conflicts.

'Angola benefited from a recovery in oil production. In Ethiopia, declining coffee prices and supply bottlenecks slowed growth slightly from a very high level. However, South Africa's growth slowed further, in large part due to tense industrial relations, anaemic private investment, and weaker consumption growth, the latter affected by slowing disposable income growth and weakening consumer confidence.

'With a few exceptions, inflation remained broadly stable in the region. Recent global financial market volatility has affected several economies in the region, although most low-income countries experienced little impact given their limited links with global financial markets. Among frontier markets, Nigeria's currency weakened against the U.S. dollar at the peak of the volatility, although financial conditions have since stabilised,' it further explained.